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By XE Market Analysis September 21, 2017 2:47 pm
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    XE Market Analysis: Asia - Sep 21, 2017

    The dollar gave back some of its post-FOMC gains seen on Wednesday, losing modest ground to all the major currencies. The move came despite decent U.S. data, which saw jobless claims below expectations, and a firmer Philly Fed index and leading indicators. EUR-USD bottomed at 1.1899 after the early data, before making its way to 1.1953 into the London close. USD-JPY faded to 112.14 lows from 112.55, though managed a comeback into the close, topping near 112.60. Cable rallied over 1.3585, while USD-CAD printed 1.2321 lows on firmer oil prices.

    [EUR, USD]
    EUR-USD has remained above post-FOMC lows of 1.1862 seen in N.Y. trade on Wednesday, topping at 1.1953 into the London close. The pairing has since fallen back under 1.1930, and is back under its 20-day moving average at 1.1938. With Fed QT on the horizon, and more rate hikes coming, we suspect the euro has seen its best levels versus the dollar going forward, especially when combined with a foot-dragging ECB with regards to its easy policy stance.

    [USD, JPY]
    USD-JPY has maintained recent altitude, holding post-FOMC gains, and adding to them overnight following a dovish BoC. The pairing topped at 112.71, a two-month high, before easing to 112.14 lows, then reclaiming the 112.50 mark. BoJ Governor Kuroda said it was "hard to show a specific exit strategy" during his post-policy meeting press conference, where he distanced the BoJ's stance to that of the Fed and other central banks. He said that the BoJ will "patiently continue accommodative policy to achieve 2% inflation." As a result of the opposing central bank policy paths, USD-JPY will remain a buy into dips.

    [GBP, USD]
    Cable picked up into the London close, boosted by news that PM May is gearing up to break the deadlock in Brexit negotiations, and particularly by reports that the government is seeking a two-year transition period beyond Brexit in March 2019. Better than expected UK government borrowing data today, and yesterday's much stronger than expected retail sales data for August, have also been keeping the pound underpinned. Cable topped at 1.3585 after opening near 1.3475.

    [USD, CHF]
    EUR-CHF has remained buoyant, clocking a new 32-month high for the second time in three days, this time at 1.605. 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 came off its opening highs over 1.2360, fading into 1.2321 into the London close. The CAD got a modest boost from the stronger Canadian wholesale figures, though further USD-CAD pressure came as WTI crude prices remained firm. Support now comes in at 1.2318, which represents the 20-day moving average.

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