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By XE Market Analysis September 10, 2019 3:05 pm
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    XE Market Analysis: Asia - Sep 10, 2019

    The Dollar headed slightly lower in quiet N.Y. trade on Tuesday, later recovering to near unchanged on the day. There were few driving factors, with no significant data releases on the calendar. The uptick in the USD later in the session was largely driven by higher Treasury yields, which headed up as the 3-year note auction was poorly subscribed. EUR-USD ranged between 1.1031 and 1.1052, settling near 1.1050. USD-JPY fell from 107.48 to 107.19 lows, later recovering to 107.45. USD-CAD opened at 1.3179 highs, later dropping to 103135 on stronger oil prices. Cable meanwhile, peaked at 1.2374, before turning sideways near 1.2350.

    [EUR, USD]
    EUR-USD touched a 1.1031 low at mid-morning, since rallying to 1.1052 highs in light trade. Traders are gearing up for Thursday's ECB meeting, where some form of easing, likely including a 10 basis point rate cut further into negative territory is widely expected. Investors have continued to scale back easing expectations ahead of Thursday's ECB meeting, with the Euro well above the multi-year lows seen last week, and EGB yields firmer. There appears to be some upside risk for the pairing following the Bank's announcement, where disappointment is a real possibility. Until then, we look for buy-the-dip to remain in place for EUR-USD.

    [USD, JPY]
    USD-JPY printed near six-week highs of 107.49 into the N.Y. open, continuing to be supported by hopes for a solution to the U.S./China trade dispute. U.S. Treasury Secretary Mnuchin said recently there has been "lots of progress on talks" recently. In addition, a Reuters source report ahead of the U.S. open indicated BoJ policymakers have discussed further easing measures, including cutting rates further into negative territory. This weighed on the Yen as well. Since then, USD-JPY pulled back under 107.20, weighed down by Wall Street's reversal lower.

    [GBP, USD]
    Cable rallied through the N.Y. morning session, though remained below the six-week highs seen Monday. Overall, the pound's price action has remained buoyant, reflecting the sharply downsized odds for a no-deal Brexit scenario as soon as October 31. It is now legally forbidden for the UK to exit the EU on Halloween without a deal on divorcing terms, unless Parliament votes for it, which isn't going to happen. With parliament dismissed for now, the Pound is likely to maintain sideways motion near current relatively lofty levels.

    [USD, CHF]
    EUR-CHF has now rallied for five straight sessions, printing a near six-week peak at 1.0968,and above its 50-day moving average for the first time since May, extending the rebound from the 26-month low seen last Tuesday at 1.0811. The pickup in risk appetite in global markets, and reduced risk for a no-deal Brexit, has taken the pressure off the ECB as it heads into Thursday's government council meeting. This has helped float the euro and at the same time see an unwinding in the franc's safe haven premium (such as it is given the punishing -0.75% deposit rate in Switzerland).

    [USD, CAD]
    USD-CAD bounced from Monday's 1.3139 one-plus month low, peaking at 1.3191 in London morning trade. Sellers emerged ahead of the 50-day moving average at 1.3192, seeing the pairing retrace to 1.3160 in early North America. Another surge in WTI oil prices has helped CAD sentiment as well, though modest risk-off conditions so far this morning have limited USD-CAD's downside potential. Monday's low now marks support.

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