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By XE Market Analysis October 29, 2019 2:51 pm
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    XE Market Analysis: Asia - Oct 29, 2019

    The Dollar fell through the N.Y. morning session on Tuesday, with gains in the Euro and Pound again weighing on the USD. News that the U.K. Labour Party, the principal opposition in the UK, will back a general election in early December was a driver of both GBP and EUR strength. Incoming U.S. data was mixed, with consumer confidence missing the mark, and pending home sales better than expected. Neither had much impact on the FX market. EUR-USD opened at 1.1080 before topping at 1.1118. USD-JPY slipped briefly to 108.75 after being unable to hold the 109 handle. Cable topped at 1.2094, later easing under 1.2805. USD-CAD was choppy ahead of Wednesday's FOMC and BoC meetings, ranging between 1.3042 and 1.3097.

    [EUR, USD]
    EUR-USD traded to 1.1118 highs into the London close, up from pre-open lows of 1.1075. The news that the U.K. election will likely go forward in December supported the Pound and the Euro through the morning session. With some light at the end of the Brexit tunnel now, and a U.K. crash-out unlikely, the Euro will likely attempt to put in a bottom near last week's 1.1070 low. For the near term, trade is likely to slow into Wednesday's FOMC announcement.

    [USD, JPY]
    USD-JPY has pulled back from the 109.00 level after topping at 109.06, a near three-month high during Asian hours, The pairing has since eased to 108.75, with profit taking behind the modest move lower. The risk backdrop remains a bit soft, which has limited buying sentiment, while the 200-day moving average at 109.06 has provided solid resistance. We now look for some consolidation ahead of the FOMC announcement on Wednesday, and the BoJ on Thursday.

    [GBP, USD]
    Cable pulled back near 1.2850 after earlier rallying to a high of 1.2904. The high was seen following news that Labour Party, the principal opposition in the UK, will back a general election in early December. Labour's move has erased the risk of there being a so-called zombie parliament, though an election had in any case been looking increasingly likely with PM Johnson having said that he was looking to work with the Liberal Democratic and SNP parties in legislating for an out-of-cycle election. The possibility for a no-deal Brexit on January 31 is still there, so it's not surprising that follow-through sterling demand has been absent following the knee-jerk rally. As things stand, a pre-Christmas election is looking likely.

    [USD, CHF]
    EUR-CHF has been lifted recently by the diminishing in no-deal Brexit risks, which has been supportive of the euro. The cross last week printed a two-and-a-half-month high at 1.1059 and has since remained buoyant.

    [USD, CAD]
    USD-CAD fell to three-plus month lows of 1.304 early in the North American session, since rallying over 1.3090. Choppy conditions have been seen ahead of the FOMC and BoC policy decisions on Wednesday, where a cut from the Fed is expected, as the BoC is seen remaining on hold. Such an outcome will likely support the CAD, as the USD supportive interest rate differential will largely evaporate. Support is at the 2019 lows of 1.3015, with resistance at 1.3100.

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