Home > XE Currency Blog > XE Market Analysis: Europe - Dec 05, 2017

AD

XE Currency Blog

Topics4861 Posts4906
By XE Market Analysis December 5, 2017 3:09 am
    XE Market Analysis's picture
    XE Market Analysis Posts: 3290
    XE Market Analysis: Europe - Dec 05, 2017

    The yen weakened while the dollar bloc units outperformed, led by the Australian dollar following an above-forecast retails sales report out of Australian, which was subsequently backed-up by a comparatively less-dovish statement from the RBA governor after the December policy meeting did the expected and left the cash rate at 1.5% for a 16th consecutive month. AUD-USD carved out a three-week high of 0.7653, and AUD-JPY gained by nearly 1% in rallying to around the 86.20 mark. The yen market was non too perturbed by mostly lower stock markets in the Asia-Pacific region, which were afflicted by a resumption in the global tech sector selloff (the Nasdaq closed on Wall Street yesterday with a loss of just over 1%). USD-JPY ground above 112.50, but remained well off yesterday's nine-day high at 113.08. USD-CAD, which has been on a downward path since last Friday's release of forecast-busting Canadian GDP and employment data, edged out a six-week low of 1.2651. EUR-USD, meanwhile, maintained a narrow range around 1.1865-75. The pound remained under pressure after PM May disappointed expectations by saying that the EU and UK have yet to reach an accord on divorcing terms, although she also said that she was confidence that a positive announcement would be likely by the end of the week. Cable ebbed to the low 1.34s from around 1.3480.

    [EUR, USD]
    EUR-USD maintained a narrow range around 1.1865-75, consolidating above the 1.1829 low after declining on Friday and yesterday. A latest price action dynamic has returned EUR-USD to about the midway point of the range that's been seen over the last three months. We anticipated the broadly sideways chop will continue for now. Resistance is at 1.1905-10, support at 1.1814-15.

    [USD, JPY]
    USD-JPY lifted marginally during the pre-European session in Asia. Higher U.S. Treasury yields helped lift the pairing in the face of generally lower stock markets in Asia-Pacific, which were afflicted by a resumption in the global tech sector selloff (the Nasdaq closed on Wall Street yesterday with a loss of just over 1%). AUD-JPY buying was seen following above-forecast retail sales data out of Australia, which was followed by a comparatively less dovish statement from the RBA governor following today's policy meeting that left the cash rate unchanged at 1.5%. The crosses lifted by almost a big figure to around 86.20. USD-JPY ground above 112.50, but remained well off yesterday's nine-day high at 113.08. We see the pairing as having entered a choppy, net sideways phase, centred around 112.00 to 115.00, with medium term risks to the upside given the potential for a sustained upward ascent in U.S. Treasury yields. Support is at 112.35-37 and resistance is at 113.27-30.

    [GBP, USD]
    The pound remained under pressure after PM May disappointed expectations by saying that the EU and UK have yet to reach an accord on divorcing terms, although she also said that she was confidence that a positive announcement would be likely by the end of the week. Cable ebbed to the low 1.34s from around 1.3480. Sterling market participants will remain on tenterhooks for an announcement that the divorce terms have been agreed, as this would greenlight the commencement of post-Brexit trading terms. Cable has support at 1.3379-80, and resistance is at 1.3500.

    [USD, CHF]
    EUR-CHF has seen volatile price action over the last sessions, having on Friday turned sharply lower, to a low of 1.1599 after clocking a 35-month high of 1.1737, and subsequently, yesterday and today, lifting back above 1.1690. There have been multiple failures to sustain gains above 1.1700 over the last month, Friday being the latest, and market participants will be wary of supply above 1.1700. We remain bullish over the medium term, however. Assuming the Eurozone has conquered, or can conquer, existential political threats, and assuming the SNB remains anchored to ultra-accommodative monetary policy, which looks likely to be the case for the foreseeable, we anticipate EUR-CHF will make an eventual return to 1.2000. Support is at 1.1650.

    [USD, CAD]
    USD-CAD, which has been on a downward path since last Friday's release of forecast-busting Canadian GDP and employment data, edged out a six-week low of 1.2651. The brighter fundamental picture in Canada has offset the softer tone in oil prices. USD-CAD has trend support at 1.2614-25, and resistance at 1.2727-30.

    Paste link in email or IM