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By XE Market Analysis September 19, 2017 3:14 pm
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    XE Market Analysis: Asia - Sep 19, 2017

    The dollar stumbled some early in the session in N.Y. on Tuesday, though was little impacted by the combination of firmer import prices, a wider current account deficit, and near in-line housing starts. Risk appetite perked up some, allowing the greenback to hold its own through the close. USD-JPY sold off on the back of pre-Trump U.N. speech, where N. Korea was in the president's crosshairs. The pairing bottomed at 111.21 before later touching 111.83 highs. EUR-USD idled in the mid to upper 1.19s ahead of Wednesday's FOMC announcement. USD-CAD held over 1.2250, and was capped at 1.2300 into the open. Cable meanwhile, traded either side of 1.3500.

    [EUR, USD]
    EUR-USD has been steady under 1.2000 through the N.Y. morning session, ranging between 1.1964 and 1.1992 in light trade. FX has been relatively quiet overall, as traders gird for Wednesday's FOMC announcement. Prospects for the Fed announcement of QT will keep euro bulls on their toes, especially with the ECB continuing to drag its feet with regards to the end of its easing program. EUR-USD's 20-day moving average at 1.1926 is the next support level.

    [USD, JPY]
    USD-JPY printed intra day lows of 111.21, coming from nearly two-month highs of 111.88 seen overnight. Profit taking has been the driver this morning, with talk of yen buying heard ahead of President Trump's speech to the U.N. General Assembly at 10:00 EDT. N. Korea was on the agenda, and Trump called out the rogue nation, and its leader, newly dubbed "Rocket Man". Later, the pairing rallied back to 111.83 highs before fading to 111.50 into the close.

    [GBP, USD]
    Cable found demand on dips after coming within a few pips of Monday's correction low. Analysts at HSCB and RBC are among a flurry of forecasters now calling for the BoE to tighten the repo rate by 25 bp at its November MPC meeting, with some calling for a follow-up rate hike, in May next year in the HSBC view. Cable traded on either side of 1.3500 after earlier hitting a 1.3468 low. We anticipate a sideways chop for now, assuming the Fed doesn't produce a hawkish surprise at its announcement tomorrow.

    [USD, CHF]
    EUR-CHF rallied to a new 32-month high of 1.1564. A an ebb in geopolitical tensions and fresh euro gains underpinned, along with last week's SNB 's post-policy meeting guidance, where the central bank, while admitting that exchange rate overvaluation is now less acute, stated that it would remain willing to "intervene in FX markets as necessary" which is "essential in order to reduce the attractiveness of the Swiss franc investment and thus ease pressure on the currency." The SNB said that the currency "remains highly valued," even in light of the relatively sharp weakening the currency saw from late July.

    [USD, CAD]
    USD-CAD edged slightly higher following the weaker Canadian manufacturing data, topping at 1.2288 before easing back to 1.2265 lows. Firmer WTI crude prices limited gains through the morning, as it traded near four-month highs. Later, as oil slipped back, USD-CAD topped at 1.2290. USD-CAD maintained much of the pop seen late in Monday's session after BoC Deputy Governor Lane's comments suggested scope for a shift to a gradualist approach to further rate hikes.

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