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By XE Market Analysis September 20, 2017 3:45 pm
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    XE Market Analysis: Asia - Sep 20, 2017

    FX trade was quiet through the morning session, with activity muted ahead of the FOMC announcement. The dollar rose, then fell, then rose again following the Fed, as it detailed the kickoff of its QT program, as widely expected, and left another 2017 rate hike on the table. EUR-USD spiked to eight session highs of 1.2035, before falling back under 1.1875, below its 20-day moving average of 1.1935. USD-JPY meanwhile, bottomed at 111.12, then shot up over 112.40, a two-month high, and above its 200-day moving average. USD-CAD printed two-week highs of 1.2362, while cable slid back from 14-month highs seen in London to 1.3490.

    [EUR, USD]
    EUR-USD ranged between 1.1984 and 1.2011 in N.Y. morning trade, as dealers kept their powder dry ahead of the FOMC announcement. The Fed left the door open for another 2017 rate hike, while revealing the start of its QT program. These were enough to send EUR-USD to one-week lows under 1.1890. The FOMC outcome, combined with ECB foot dragging on ending its QE program should continue to weigh down the euro going forward.

    [USD, JPY]
    USD-JPY was steady between 111.25 and 111.50 since the N.Y. open, with traders largely sitting on their hands into the FOMC announcement. The risk backdrop remained fairly neutral, as Wall Street traded near flat, and as yields steadied. The announcement of the beginning of the Fed's QT program, and prospects for another 2017 rate hike will were taken as a bullish sign for the pairing, which is in stark contrast to the expected continuation of the BoJ's easing program for the foreseeable future. USD-JPY spiked up to two-month highs over 112.40 after the Fed.

    [GBP, USD]
    Cable was lifted by official UK data for retail sales in August whichbeat expectations. Cable rallied to 1.3607 after the data, before falling back into the N.Y. open. The pairing was quiet into the FOMC announcement, though spiked up to 1.3658, a 14-month highs, before sliding to near 1.3450 after the Fed announced its QT program, and left another rate hike on the table for 2017.

    [USD, CHF]
    EUR-CHF jerked between 1.1557 and 1.1513 after the Fed announcement, before settling near unchanged at 1.1535. The cross had rallied to a new 32-month high of 1.1564 on Tuesday. A an ebb in geopolitical tensions 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 pulled back to session lows of 1.2233 after topping earlier at 1.2273 earlier. Light selling emerged as WTI crude topped the $51/bbl mark for the first time since May 25. CAD liquidity was said to have been fairly light into the FOMC announcement. The pairing later spiked up to two-week highs over 1.2390 after the Fed.

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