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By XE Market Analysis September 12, 2018 3:23 pm
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    XE Market Analysis: Asia - Sep 12, 2018

    The dollar traded lower versus major currencies in N.Y. on Wednesday, initially falling on the back of cooler U.S. PPI numbers, then dropping further as reports circulated that the U.S. and China would restart stalled trade talks in the next few weeks. The news saw the Greenback lose some of its safe-haven appeal. Risk-sensitive USD-JPY initially rallied on the trade news, though later fell to 111.12 lows from its bounce over 111.45. EUR-USD topped at 1.1649, up from opening lows near 1.1575. USD-CAD fell to two-week lows of 1.2981 on higher oil prices and encouraging signs on NAFTA negotiations. Cable peaked near 1.3070 after opening at 1.2990.

    [EUR, USD]
    EUR-USD rallied to four-session highs of 1.1649 following the news that the U.S. and China may restart trade talks. The Dollar generally was weighed down by the story, which took some pressure off of safe-haven backed USD buying. The pairing earlier picked up from 1.1576 lows on the back of cooler U.S. PPI.

    [USD, JPY]
    USD-JPY retreated early in the session following the cool U.S. PPI print, bottoming at 111.22 from pre-open highs of 111.56. The risk-sensitive pairing later got a boost following reports that the U.S. and China may restart trade talks in the coming weeks. USD-JPY recovered to 111.46 highs as Wall Street pared earlier losses.

    [GBP, USD]
    Sterling slipped on a report of a challenge on PM May, with the BBC reporting that 50 Tory MPs are plotting to oust PM May. Cable posted an intra day low at 1.2980 into the N.Y. open, though later rallied on general dollar weakness following reports that the U.S. and China would restart trade talks in the coming weeks.

    [USD, CHF]
    EUR-CHF was steady on either side of 1.1300, after falling under 1.1200 on Friday, following the release of the stronger than expected Q2 GDP outcome out of Switzerland. This pushed EUR-CHF to a 14-month low at 1.1181 on Friday, while Switzerland posted Q2 growth of 0.7% q/q while Q1 growth was upwardly revised to 1.0% y/y from 0.6% y/y. It's rare for Swiss data to impact the currency, but the strength of the data, which marks the fifth consecutive quarter of above-average expansion, and the strength of the manufacturing sector in particular, have invited analyst narratives questioning the need for the SNB's ultra accommodative policy. The Swiss deposit rate is -0.75%.

    [USD, CAD]
    USD-CAD recovered slightly from the 1.3142 lows seen into the North American open, following sharp losses seen after the close on Tuesday, which came on hopes for a NAFTA resolution, and a sharp oil rally, which took WTI crude over the $70 mark. The pairing later topped at 1.3068. Canada's foreign minister Freeland said yesterday a trade deal was "imminently possible" following talks with USTR Lighthizer. Reports that Canada may make some concessions to open its dairy industry, which has been a sticking point, have made the rounds. Subsequently, USD-CAD fell to two-week lows of 1.2981 from near 1.3060 following a Bloomberg headline quoting Mexico's economy secretary and NAFTA lead negotiator Guajardo saying he sees a "high chance" for a U.S./Canada trade deal.

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