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By XE Market Analysis August 27, 2019 3:43 am
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    XE Market Analysis: Europe - Aug 27, 2019

    The Yen firmed up, and was heading into the London interbank open with a 0.4% gain versus the Dollar, and a 0.6% rise against the Australian buck, which has been the underperformer of the main currency pack. The flight-to-safety dynamic, while modest, has been concomitant with a dip in S&P 500 futures, and has come despite firmer stock markets in Asia. While President Trump's apparent walk back of his trade war stance has mollified investors, and not without good reason as it's now pretty clear that he will not push things too far given the threat of recession and sustained stock market declines, there remains an antsy undertone in markets. USD-JPY printed an intraday low at 105.59, putting in some distance from yesterday's 106.41 peak. At prevailing levels the pair is sitting at about the halfway point of the range that was seen on Friday and yesterday. AUD-JPY saw a similar price action, and AUD-USD also saw some down draft. Elsewhere, narrow ranges prevailed. EUR-USD flatlined around 1.1100, consolidating declines seen yesterday following sub-forecast Eurozone data. Cable traded in a narrow range in the lower 1.2200s. There is little of note on the calendar today, leaving focus on the trade front. On the Brexit front, a sense of being in the quiet before the storm continues to prevail. A cross-party group of members of parliament are plotting to remove a no-deal Brexit legislatively. Battle will commence when parliament returns from summer recess, next Tuesday.

    [EUR, USD]
    EUR-USD has been flatlining around 1.1100, consolidating declines seen yesterday following sub-forecast German Ifo index, which fell to 94.3 in August, the lowest since Nov 2012. We retain a bearish view of the pairing given the ECB's course to easing in September and the risk of a no-deal Brexit, which in the event would be detrimental to the Eurozone economy. The political situation in Italy is also on the worry list. Support comes in at 1.1079-80, and resistance at 1.1147-50.

    [USD, JPY]
    The Yen firmed up, and was heading into the London interbank open with a 0.4% gain versus the Dollar, and a 0.6% rise against the Australian buck, which has been the underperformer of the main currency pack. The flight-to-safety dynamic, while modest, has been concomitant with a dip in S&P 500 futures, and has come despite firmer stock markets in Asia. While President Trump's apparent walk back of his trade war stance has mollified investors, and not without good reason as it's now pretty clear that he will not push things too far given the threat of recession and sustained stock market declines, there remains an antsy undertone in markets. USD-JPY printed an intraday low at 105.59, putting in some distance from yesterday's 106.41 peak. At prevailing levels the pair is sitting at about the halfway point of the range that was seen on Friday and yesterday.

    [GBP, USD]
    Cable has traded in a narrow range in the lower 1.2200s. There is little of note on the calendar today, leaving focus on the trade front. On the Brexit front, a sense of being in the quiet before the storm continues to prevail. A cross-party group of members of parliament are plotting to remove a no-deal Brexit legislatively. Battle will commence when parliament returns from summer recess, next Tuesday.

    [USD, CHF]
    EUR-CHF has turned back under 1.0900 amid a skittish sentiment in global markets. We retain a bearish view of the cross given ECB's course to additional monetary stimulus in September, and the risk of a disorderly no-deal Brexit on October 31.

    [USD, CAD]
    USD-CAD is down for a third consecutive day, today printing a two-week low at 1.3230. Improved risk appetite in global markets has been returning support to the Canadian dollar. Oil prices have also found a footing over the last day after dropping sharply in the latter part of last week. USD-CAD has resistance at 1.3270-73.

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