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By XE Market Analysis September 11, 2019 3:06 pm
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    XE Market Analysis: Asia - Sep 11, 2019

    The Dollar firmed up some in N.Y. trade on Wednesday, seeing the DXY rally from overnight lows of 98.33, topping at 98.74 at mid-morning. A slightly warmer U.S. PPI core outcome provided some support, though position squaring was behind EUR-USD slippage, ahead of Thursday's ECB meeting. We expect a 10 basis point rate cut from the Bank. EUR-USD slipped to 1.0985 lows early in the session, later peaking at 1.1010. USD-JPY was range bound between 107.81 and 1067.63. USD-CAD topped at 1.3215 from lows near 1.3150 as oil prices fell. Cable eased to 1.2313 lows.

    [EUR, USD]
    EUR-USD printed one-week lows of 1.0985, down from Asian highs of 1.1055. Dip- buying had been seen earlier in the week in anticipation of an underwhelming ECB easing, though unwinding of that sentiment appears to have been a driver this morning, with position squaring noted. Resistance is now at the 20-day moving average at 1.1055, with support seen at 1.0968, last Wednesday's low.

    [USD, JPY]
    USD-JPY maintained altitude through the N.Y. session, after printing better than one-month highs of 107.85 in early London morning trade. The pairing ranged between 107.81 and 107.63 since the open. Risk-on conditions have kept sellers away, as has reported progress on the U.S./China trade front. In addition, a Reuters source report on Tuesday indicated BoJ policymakers have discussed further easing measures, including cutting rates further into negative territory. Unless the trade war escalated again, we look for USD-JPY to remain in buy-the-dip mode.

    [GBP, USD]
    Cable looks to have found an equilibrium of sorts after rebounding about 3% out of the major-trend low seen last week at 1.1958. GBP-USD ranged between 1.2318 and 1.2350 through the N.Y. session. Regarding Brexit, Parliament closed on Tuesday, due to PM Johnson's controversial "proroguing" manoeuvre, which has shut down Parliament until October 14. Johnson continues to indicate that a deal with the EU is still possible by October 18, though there is a lack of specifics, and we know his team hasn't presented the EU with any fresh proposals with regard to how the Irish border backstop issue might be resolved.

    [USD, CHF]
    EUR-CHF eased back some after rallying for six straight sessions, printing a near six-week peak at 1.0971, and back under its 50-day moving average. The cross fell to 1.0910 lows in morning trade. 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 rallied over 1.3210, up from pre-open lows of 1.3140. The last 40 points of the rally came as WTI crude fell nearly $1.50/bbl in about a five-minute time span. Profit taking on long crude positions was noted, after the contract fail to make new highs after the large EIA inventory draw reported earlier. USD-CAD is back above its 50-day moving average of 1.3195, though will have to close above the level to shift the technical outlook.

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