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By XE Market Analysis May 19, 2017 3:55 am
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    XE Market Analysis: Europe - May 19, 2017

    The dollar has ebbed back some in Asian trade today after rallying after the London close yesterday amid reports, cited by the Zerohedge website, of a May 3 video of FBI's Comey suggesting there was no obstruction of justice from the Trump administration. The narrow USD index spiked over 0.5% on the news, to a 97.97 high, though has since receded back to the 97.60 area. EUR-USD recovered to the low 1.11s after printing a two-session low at 1.1076, and USD-JPY has dipped to levels around 111.20 after spiking to a 111.74 peak. Wall Street closed higher, and equity trading across Asia have been mixed. Investors will be wanting more clarification regarding the Trump situation. Trump himself has embarked on a nine-day foreign trip.

    [EUR, USD]
    EUR-USD recovered to the low 1.11s after printing a two-session low at 1.1076 yesterday. A video emerged yesterday of Comey suggesting that Trump did not, after all, try to obstruct justice, though investors are still wanting more clarification regarding the situation. On the euro side of the equation, data have been generally encouraging, which along with the abatement of political existential risk in the Eurozone following the French election earlier in the month, looks set to pave the way for the ECB to finally make a start at de-stimulating monetary policy. We recommend following the upward EUR-USD trend. Former resistance is at 1.1053-55 now reverts as support, while the high from last November at 1.1299 provides an upside marker.

    [USD, JPY]
    USD-JPY has dipped to levels around 111.20 after spiking to a 111.74 peak during the New York afternoon following the emergence of a video of Comey that apparently suggests that Trump did not try to obstruct the investigation into Russia's involvement in last year's presidential election. Markets are wanting clarification. Equity trading across Asia have been mixed.

    [GBP, USD]
    Cable failed to sustain gains above 1.3000 yesterday, closing out at levels around 1.2935. This left an eight-month high at 1.3048. The pound failed to close above the 1.2977 level, which it needed to do to "close the gap" of the October-6 flash crash on a closing basis. While incoming UK fundamental leads have been pound positive, the volatility has stemmed form the dollar side of the equation, linked to the trials and tribulations of the Trump presidency. We recommend facing Cable weakness. Support is at 1.2894-1.2900.

    [USD, CHF]
    EUR-CHF has recovered to around the 1.0900 level after logging a 10-day low at 1.0866. The volatility has stemmed from the impact the Trump intrigues have been having, which has been affecting safe haven currencies. The cross remains well up on the sub-1.07 levels that were prevailing in April before the French presidential elections, however.

    [USD, CAD]
    USD-CAD has seen some whippy price action over the last three days, though closing levels have consistently held around 1.3590 and 1.3600. With oil prices remaining perky, we anticipate a break lower in USD-CAD. Trend support is at 1.3533-35, resistance at 1.3622-25..

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