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By XE Market Analysis September 26, 2017 2:55 pm
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    XE Market Analysis: Asia - Sep 26, 2017

    The dollar was on the uptick through the morning session, then rallied broadly following Yellen's comments, where she left a December rate hike firmly on the table, saying the Fed should be "wary of moving too gradually." EUR-USD initially moved up to 1.1795 from 1.1780, before falling to new one-month lows of 1.1758. USD-JPY topped at 112.48, from lows near 112.00. Short covering reversed these moves however, seeing USD-JPY steady near 112.20, and EUR-USD reclaiming the 1.18 handle. USD-CAD faded into 1.230 ahead og BoC governor Poloz's Wednesday speech, while cable recovered 1.3450.

    [EUR, USD]
    EUR-USD bottomed at 1.1757, a one-month low after Yellen's comments on moving too slowly with policy tightening. The pairing had opened near 1.1790. Short covering has since set in, lifting the euro to 1.1810 highs. Bigger picture, the dollar is liable to maintain a firmer tone, as Yellen kept a December rate hike squarely on the table.

    [USD, JPY]
    USD-JPY was steady above 112.00 through the morning session, later popping to 112.48 highs after Yellen kept a December rate hike in order. The pairing succumbed to some profit taking into the close, prompted by a pullback in yields, settling in over 112.10.

    [GBP, USD]
    Cable was down for a second consecutive day, following EUR-USD lower. Cable logged an 11-day low at 1.3410, though perked up some on short covering following Yellen's speech. We have been recommending shorting the pair since the Fed's hawkish guidance last week, as we think markets overreacted to the BoE's signal for a modest rate hike, to remove last August's post-Brexit vote cut.

    [USD, CHF]
    EUR-CHF has come off the boil after clocking a new 32-month high at 1.1623 on Friday. Political uncertainty in Germany has taken a toll on the euro. The SNB stated at its quarterly policy review this month that the Swiss franc "remains highly valued," even in light of the relatively sharp weakening the currency saw from late July. We look for EUR-CHF to make an eventual return to the SNB's former floor level, at 1.2000, though this assumes that the political situation in Germany becomes clearer.

    [USD, CAD]
    USD-CAD printed three-week highs of 1.2401 early in the session, later falling back to 1.2331 lows after Yellen's speech. The pairing has posted higher daily highs and lows for two sessions now, and largely remains in buy-the-dip mode following BoC Lane comments last week, which appeared to take some urgency out of the Bank's rate hike pace going forward. Key will be comments from BoC Governor Poloz, who is set to speak on Wednesday. USD-CAD support now comes in at 1.2297, the 20-day moving average, with resistance at 1.2470, the 50-day moving average.

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