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By XE Market Analysis October 31, 2019 3:24 pm
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    XE Market Analysis: Asia - Oct 31, 2019

    The Dollar attempted to rally some in N.Y. morning trade on Thursday, following decent incoming early data. A huge Chicago PMI miss however, saw early gains come unwound, taking the Greenback to near opening lows again. Risk-off conditions weighed heavily on USD-JPY, which dipped under the 108 mark for the first time in three weeks. EUR-USD bottomed at 1.1132, down from 1.1165 near the open, before heading back toward 1.1160. USD-CAD downside was limited due to oil price losses, and that pairing bounced some from 1.3135 lows. Cable was range bound over 1.2925.

    [EUR, USD]
    EUR-USD retraced some of its post-Fed rate cut gains, basing in N.Y. at 1.1132, after printing two-week highs of 1.1175 in London morning trade. The Fed's 'dovish pause' forward guidance stressed that tightenings are off the table, with Chair Powell indicating the FOMC won't even consider rate hikes until inflation is back at the 2% target. This prompted broad Dollar losses through the overnight session, though since then, prospects for save-haven flows into the USD on the back of renewed trade concerns, prompted position squaring backed selling.EUR-USD resistance now comes at 1.1180, the October 21 high, with support seen at 1.1080, Wednesday's low.

    [USD, JPY]
    USD-CAD eased back from the two-week highs seen on Wednesday, which came on the back of a dovish tilting BoC statement. The paring topped at 1.3208 yesterday, since easing to 1.3154 in late morning trade. Risk-off conditions, led by reports that China may not agree to a long term trade deal with the U.S. has weighed on the CAD, as have better than one-week lows for WTI crude. The Fed rate cut seen on Wednesday will likely limit USD-CAD gains for the time being, as the USD interest rate advantage has been virtually eliminated.

    [GBP, USD]
    Cable rallied to eight-session highs of 1.2975 in early N.Y. trade, later easing back to 1.2925. We don't expect any further significant unwinding in the BRexit related Sterling discount, as all options remain open with regard to how Brexit is resolved -- ranging from no deal to Brexit cancelled, depending on the results of the December-12 general election and any referendum after the election -- and with the combined Conservative and Brexit parties support in Politicos poll track now taking at 48%, having ticked 2 points higher over the last week.

    [USD, CHF]
    EUR-CHF eased back under the 1.1000 mark in N.Y trade, though remains relatively buoyant, 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 besides Thursday, has remained over 1.1000 for over a week.

    [USD, CAD]
    USD-CAD rallied from 1.3085 after the BoC announcement, where rates were left unchanged, as expected. The Bank's dovish tilting statement said in part "Growth in Canada is expected to slow in the second half of this year to a rate below its potential. This reflects the uncertainty associated with trade conflicts, continuing adjustment in the energy sector, and the unwinding of temporary factors that boosted growth in the second quarter", which e weighed on the CAD significantly. Ahead of the FOMC, the pairing rallied to 1.3185, with another push to 1.3208 highs following the hawkish tilted FOMC statement.

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