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By XE Market Analysis September 22, 2017 2:18 pm
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    XE Market Analysis: Asia - Sep 22, 2017

    The dollar was marginally firmer in N.Y. trade on Friday, with end of week position squaring behind the move. EUR-USD slipped under 1.1940 from over 1.1980 at the open, while USD-JPY stumbled early, reportedly on pre-weekend safe-haven yen buying the driver. The pairing later recovered the 112 handle. USD-CAD spiked up on softer Canada CPI and retail sales data, topping over 1.2350 from 1.2255 lows. Cable took a hit on PM May's speech in Florence, where she affirmed that the government is aiming for a hard Brexit, though she also announced that she wants a two-year "implementation period." Cable fell to 1.3488 low from over 1.3580 before recovering some.

    [EUR, USD]
    EUR-USD faded from session highs of 1.1983 to a 1.1938 low, now finding a few buyers into the 1.1939 20-day moving average. The ECB's Draghi said ahead of the open the EU is "not there" yet on inflation and "that is why monetary policy remains extraordinarily accommodative". Divergent Fed and ECB policy paths should keep the euro pressured for the foreseeable future.

    [USD, JPY]
    USD-JPY struggled to hold the 112 handle through the N.Y. session, peaking at 112.17 early, before bottoming at 111.86. Given the ongoing N. Korea situation, and Pyongyang's latest threat to detonate a hydrogen bomb over the Pacific, safe-haven yen buying into the weekend has largely been expected. The pairing is still higher for the week, gaining earlier in the week on a hawkish FOMC outcome, and a uber-dovish BoJ meeting outcome.

    [GBP, USD]
    Sterling shed about 0.5% as PM May spoke in Florence, where she has rejected the Norwegian and Canadian models as being unsatisfactory for the UK, admitting that she is not pretending that you can have all the advantages of the single market with none of the disadvantages. Cable dove to a low of 1.3487 from levels near 1.3580, subsequently clawing back to around 1.3510.

    [USD, CHF]
    EUR-CHF has remained buoyant, posting a new 32-month high of 1.1623. 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 rallied to 1.2319 from 1.2255 following the Canadian CPI and retail sales figures, where the former was a bit light overall, and the latter missing the mark on an ex-auto basis. The pairing had been steady overnight, ranging between 1.2250 and 1.2334 in early Asia. WTI crude prices pulled back some, providing additional support. Given the prospects for two more BoC rate hike into year end, we continue to see the pairing in sell-the-rally mode.

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