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By XE Market Analysis April 12, 2019 7:09 am
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    XE Market Analysis: North America - Apr 12, 2019

    Both the Dollar and Yen have been notably underperforming most other currencies so far today, which has come against a backdrop of reviving risk appetite following strong import data out of China. In the mix was a strong bid for EUR-JPY at the Tokyo fix today, which drove the Euro generally higher while leading to Yen underperformance. Interbank market narratives pointed Japan’s Mitsubishi UFJ Financial Group's purchase of aviation financing business of Germany’s DZ Bank as being behind the demand. EUR-JPY rose nearly 1% in making a three-week high at 126.71. This gave USD-JPY an underpinning, with the pair rising over 0.3% in making a four-week peak at 111.96. EUR-USD concurrently rallied to a 17-day peak at 1.1316, extending a rebound from yesterday's 1.1250 low, which had been the product of a generally firmer Dollar following the release of warmer than expected U.S. PPI data. AUD-JPY surged into four-month high territory. The Pound traded mixed. The extension of the Brexit process, with its October-31 deadline, has taken Brexit off the "of-immediate-concern" list with the UK having, for now, avoided a disorderly no-deal exit from the EU.

    [EUR, USD]
    The Euro has been risen on the back of general underperformance in both the Dollar and Yen, which came against a backdrop of reviving risk appetite following strong import data out of China. There had also been a strong bid for EUR-JPY at and after the Tokyo fixing today, which drove the Euro generally higher while leading to Yen underperformance. Interbank market narratives pointed Japan’s Mitsubishi UFJ Financial Group's purchase of aviation financing business of Germany’s DZ Bank as being behind the demand. EUR-JPY rose nearly 1% in making a three-week high at 126.71, while USD-JPY was pulled up by about 0.2%, to a four-week peak at 111.96. EUR-USD concurrently gained, too, rising to a 17-day peak at 1.1316, extending a rebound from yesterday's 1.1250 low, which had been the product of a generally firmer Dollar following the release of warmer than expected U.S. PPI data. EUR-USD has support at 1.1273-75.

    [USD, JPY]
    USD-JPY has rallied to a one-month high at 111.96 amid broad Yen underperformance today. AUD-JPY rallied notably, into four-month high territory, boosted by strong trade data out of China, which rekindled risk appetite in global markets. There was a strong EUR-JPY bid during the Tokyo session, which was linked to Japan’s Mitsubishi UFJ Financial Group's purchase of aviation financing business of Germany’s DZ Bank. EUR-JPY rose over 0.5% in making a three-week high at 126.71. USD-JPY has support at 111.51-55, which encompasses the prevailing position of the 200-day moving average.

    [GBP, USD]
    The Pound has been trading mixed and what could be best described a neutral on net, showing advances against the generally underperforming Dollar and Yen while showing gains against the Euro and some other currencies. The extension of the Brexit process, with its October-31 deadline, has taken Brexit off the "of-immediate-concern" list with the UK having, for now, avoided a disorderly no-deal exit from the EU. The extra time will buy time for the public mood to have an impact on proceedings. Although the country remains divided on Brexit, a movement calling for another referendum on EU membership appears to be gaining ground. The nearer term focus will be on efforts by the government and Labour to find a comprise around the existing Withdrawal Agreement, which Labour want to be attached with a commitment for the UK to remain in the EU customs union in the post-Brexit future. Prime Minister May has so far be disinclined to pay the price of splitting her Tory party by acquiescing to Labour's demand. As things stand, all options remain open, from a no-deal scenario, to a soft version of Brexit, to a new referendum or a general election. We continue to see a no-deal Brexit scenario as being no more than a low-risk possibility.

    [USD, CHF]
    EUR-CHF's rally extended to a fresh three-week high at 1.1325, building on the rebound from the eight-month low seen in late March at 1.1162. The rotation higher has tracked gains in EUR-USD. SNB member Maechler said last week that while the Swiss economy remains dynamic and the global economy should remain solid, inflation pressures remain very weak and the environment is fragile, which continues to warrant expansionary monetary policy. The EUR-CHF cross has been seeing choppy directional impulses since the start of the year, often times characterized by bouts of pronounced underperformance in the Swiss franc that have often been accompanied by talk/suspicions of SNB intervention.

    [USD, CAD]
    USD-CAD got a lift yesterday from a combo of 2%-odd dive in oil prices and warmer than expected U.S. PPI data yesterday, the former of which weighed on the Canadian Dollar while the latter of which impacted U.S. versus Canadian yield differentials to the benefit of the U.S. currency. These influencers produced a one-week high in USD-CAD at 1.3395, with the pair having subsequently settled to the mid 1.3300s. The pairing has been oscillating in a choppy sideways range for about a month now. More of the same looks likely. Support comes in at 1.3340, and resistance at 1.3395-1.3400.

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