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By XE Market Analysis September 23, 2019 2:56 pm
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    XE Market Analysis: Asia - Sep 23, 2019

    The Dollar steadied in N.Y. on Monday, after putting in a mixed performance overnight. Trade was generally light however. EUR-USD fell to 1.0966 lows in London morning trade after weak EU PMI data, resulting in European equities tumbling. The risk-off conditions weighed down USD-JPY, which fell to two-week lows of 107.31. In N.Y., the two pairings reversed course somewhat, taking the Euro back over 1.0990, and USD-JPY over 107.50. There was little incoming U.S. data to move the market, but for flash September PMI data, which were slightly better than August, though had little impact on the USD, and focus remained largely on trade, Iran, and Brexit. USD-CAD was steady in the upper 1.32s, while Cable was sideways on either side of 1.2430.

    [EUR, USD]
    EUR-USD bottomed at eight-session lows of 1.0966 ahead of the U.S. open, down from 1.1025 highs. Weak European PMIs took the pairing to session lows, though since then, short covering has been noted, seeing a bounce to 1.0996 highs. There has been talk of a large 1.1000 option expiry on Thursday, which may see EUR-USD center on that level until then. Sell-the-rally remains in place however, as the EU economy sputters, and as the Dollar continues to benefit from strong interest rate differentials.

    [USD, JPY]
    USD-JPY tumbled to two-week lows of 107.31 in London morning trade, down from highs of 107.77. The move came following the weak European PMI data, which saw bourses head lower, resulting in safe-have buying of the risk-sensitive Yen. The pairing has moved up to 107.55 highs in N.Y. trade, with the modest bump coming as Wall Street pares losses. There was a Bloomberg report overnight saying that China's scheduled U.S. farm visits were canceled by the U.S., not China, for "domestic reasons". This news may have helped U.S. equity futures some overnight.

    [GBP, USD]
    Cable printed a six-day low at 1.2413 into the N.Y. open, extending the correction from the two-month peak seen on Friday at 1.2582. On Brexit, PM Johnson looks to be serious about getting a deal with the EU, but the major sticking point remains the Irish border and whether Johnson's plans for "alternative arrangements" would mitigate the need for the backstop clause. Two years of negotiating by former Prime Minister May failed to resolve this. Markets are also waiting on the judgement of the UK's Supreme Court, up tomorrow, on Johnson's controversial move to shut down Parliament for a five-week period. Cable will remain on the defensive.

    [USD, CHF]
    EUR-CHF fell to eight-session lows of 1.0856 lows on Monday. The cross has tracked lower since the SNB's policy announcement last week. The SNB kept both interest rates and its language on the currency unchanged, as widely expected. The policy rate and deposit rates were both left at -0.75% and the central bank repeated that that Franc remains "highly valued", while highlighting fragile markets and affirming the commitment to intervene in currency markets if needed. There was one surprise in the statement as the SNB changed the way the negative deposit rate is calculated with a new exemption threshold, designed to reduce costs for institutions as the global low-rate environment has "become more entrenched and could persist for some time yet". This means that the SNB followed the ECB, which also took steps to limit the impact of negative rates on banks, and the step may also prepare the ground for a mid-meeting move in Switzerland should Brexit developments turn sour.

    [USD, CAD]
    USD-CAD peaked at 1.3304 in London morning trade, with the timing of the high corresponding to WTI crude's low of $57.41. The pairing's 200-day moving average at 1.3304 brought sellers back into the market, as was the case through most of last week, resulting in a pullback to a lows of 1.3262. Oil prices headed back over the $58.00 mark, and will limit USD-CAD gains for now. Support is now at 1.3252, the 20-day moving average.

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