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By XE Market Analysis October 23, 2017 3:15 pm
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    XE Market Analysis: Asia - Oct 23, 2017

    The dollar was modestly higher in N.Y. trade on Monday, though the DXY managed better than two-week highs of 94.01. There was no data to drive markets, and the risk backdrop had little impact on the FX market, with both yields and stocks range bound. EUR-USD topped at 1.1763 into the London close, then later fell back to 1.1726 lows. USD-JPY was unable to reclaim the 114 handle, falling into 113.61 lows at mid-session before steadying near 113.75. USD-CAD firmed up over 1.2660 ahead of this Wednesday's BoC policy meeting, while cable was a bit firmer, closing over 1.3200.

    [EUR, USD]
    EUR-USD recovered to 1.1756 highs after printing four-session lows of 1.1734 early in the N.Y. session. Catalonia's Puigdemont refused to accept Madrid's imposition of direct rule, and on Monday, the region's foreign affairs officer said all civil servants, including police would support the Catalan government, and oppose any orders from Madrid, according to Reuters. The situation appears to be far from over, and as a result, euro gains may be limited. EUR-USD's 20-day moving average at 1.1781 now provide resistance.Later in the session, the euro dipped to intra day lows of 1.1726, with light intra day sell-stops reportedly going through on the move under the earlier N.Y. low of 1.1734. Follow through was contained however, with the pairing climbing back to 1.1735.

    [USD, JPY]
    USD-JPY faded to 113.65 lows after failing to reclaim the 114 handle into the N.Y. open. A round of profit taking after hitting three-month highs of 114.10 after the Abe-friendly Japan elections, has been the driver. The landslide victory won by Abe's ruling party has reinforced market thinking that further ultra-accommodative monetary policy is not going away, which in the bigger picture, will continue to weigh on the yen.

    [GBP, USD]
    Cable traded near unchanged levels through the day, topping at 1.3213. The 1.3200 level roughly marks the midway point of the range that's been seen since the beginning of the month. The pound continues to trade at a Brexit-related discount, with the BoE's trade-weighted measure some 15% below levels prevailing ahead of the vote to leave the EU in June last year.

    [USD, CHF]
    EUR-CHF has corrected back under 1.1600 after last week logging a 33-month high at 1.1629. Former EUR-CHF resistance at 1.1488-90 marks a key support. We have been anticipating an eventual return to 1.2000, which is the former trading floor of the SNB's, though this assumes that political tensions (Catalonia in particular) don't worsen, as the franc tends to find demand amid news developments that might be threating to the political integrity of the Eurozone.

    [USD, CAD]
    USD-CAD was largely unmoved by the stronger Canada wholesale trade data, and remained underpinned going into Wednesday's BoC policy meeting. Friday's softer retail sales data took the pairing to levels last seen on August 31, and today has seen the it add to those gains, topping at 1.2660. The market has priced out a rate hike this week, and as a result, we may see some profit taking set in, especially if oil prices add to recent gains.

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