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By XE Market Analysis February 19, 2018 3:25 am
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    XE Market Analysis: Europe - Feb 19, 2018

    The dollar traded generally firmer today in low volumes with a number of Asian nations enjoying public holidays today, including China, Hong Kong and Taiwan. North American markets will also be absent today. EUR-USD logging a two-session low of 1.2392, and USD-JPY recouped above 106.60, extending a rebound from Friday's 15-month low at 105.52. The greenback was perhaps due a rebound after declining in but two of the last 10 sessions.

    [EUR, USD]
    EUR-USD fell to a two-session low of 1.2392, extending the correction from the 38-month high seen on Friday at 1.2556. The pullback follows a six consecutive session run higher, and comes amid a holiday-thinned session today, with key centres in Asia out today, and North American markets also due to be closed. EUR-USD has support at 1.2355-58, and resistance at 1.2465.

    [USD, JPY]
    USD-JPY recouped above 106.60, extending a rebound from Friday's 15-month low at 105.52. The move reflects a recovery in the dollar. Trading volumes have been low with a number of Asian nations enjoying public holidays today, including China, Hong Kong and Taiwan, and with North American markets going to be absent today. USD-JPY was perhaps due a rebound after declining in but two of the last 10 sessions. Data out of Japan today included trade numbers for January and the latest Tankan survey of businesses. The former revealed a deficit of Y943.4 bln, which was a little less than the expected Y1, 020.2 bln, and follows a surplus of Y358.7 bln in the prior month. January trade data are not considered "clean data", being affected by the lead in to China's new year break. The Tankan survey showed that recent yen strength has eroded business sentiment somewhat in the manufacturing sector. Regarding USD-JPY, we expect the pair to remain bid over the near term. Support is at 105.89-90, and resistance is at 106.86-88.

    [GBP, USD]
    Sterling has started the new week on a soft footing, losing ground to both the dollar and euro. This follows Friday's miss in January UK retail sales, which rose 0.1% m/m, well off the median forecast for a 0.6% m/m rise. On the Brexit front, meanwhile, the EU's chief negotiator Barnier clarified that the UK's red lines meant that a Swiss or Norway type model would be out of the question, affirming, once again, that the British government's have-cake-eat-it approach (maintaining access to the single market without observing the EU's four freedom of movement pillars for goods, services, capital and people) is simply out of touch with reality. Cable has support at 1.3950-52.

    [USD, CHF]
    EUR-CHF has been in consolidation mode in the mid 1.1500s over the last week after breaking lower in the week before, when a four-month low at 1.1446 was seen. The revival in risk appetite has helped prop up the cross.

    [USD, CAD]
    USD-CAD has lifted out of 10-day lows that were seen on Friday in the mid 1.24s. The pair has settled about a big figure higher, around 1.2550. We expect the pair to maintain a consolidation over the near term, with directional signals limited at present and with holidays in North America today reducing trading impetus.

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