Home > XE Currency Blog > XE Market Analysis: North America - Mar 25, 2019

AD

XE Currency Blog

Topics6446 Posts6491
By XE Market Analysis March 25, 2019 7:45 am
    XE Market Analysis's picture
    XE Market Analysis Posts: 4423
    XE Market Analysis: North America - Mar 25, 2019

    EUR-USD is moderately higher on the day, with above-forecast German Ifo survey data and a rise in Bund yields providing the euro with some buoyancy. EUR-USD has posted an intraday high at 1.1324, which is above 30 pips up on Friday's closing levels. This put in some distance from the two-week low that was seen on Friday at 1.1273, itself the culmination of a sharp two-day fall from a six-week high that was seen last Wednesday at 1.1448. USD-JPY recovered above 110.0 has sentiment improved during the Europe AM session. The pair had during the Tokyo session printed a six-week low at 109.70 amid a backdrop of sharp equity market losses across bourses in Asia. AUD-JPY also posted a six-week low. Sterling came under modest pressure, with Cable pegging an intraday low at 1.3167. On the Brexit front, there has been speculation over the weekend that up to 11 of Prime Minister May's cabinet have threatened to resign unless she steps down, although some senior ministers have denied this amid other speculation that she could be making a deal to quit in return for supporting her EU Withdrawal Agreement. The agreement it set to be voted on for a third time, although there has been no confirmation as yet, and probably wouldn't go ahead unless May sees she has sufficient support for it. Parliament will also have a chance this week to form a consensus on alternative Brexit plans, potentially taking control from the government (unprecedented in modern times) on Brexit. If Parliament were to succeed, this would likely mean a soft version of Brexit and quite possibly subject to a ratifying referendum. This scenario would also entail a lengthly delay before the UK left the EU.

    [EUR, USD]
    EUR-USD is moderately higher on the day, with above-forecast German Ifo survey data and a rise in Bund yields providing the euro with some buoyancy. EUR-USD has posted an intraday high at 1.1324, which is above 30 pips up on Friday's closing levels. This put in some distance from the two-week low that was seen on Friday at 1.1273, itself the culmination of a sharp two-day fall from a six-week high that was seen last Wednesday at 1.1448. The high, in turn, had been the product of the Fed's reaffirmed dovish-leaning policy stance, and the following correction came as Bund yields went negative for the first time since 2016 following underwhelming preliminary March PMI outcomes for the Eurozone. Also in the mix of sentiment drivers were above-forecast jobless claims and Philly Fed index data outcomes in the U.S. EUR-USD has remained below the midway level of the 1.1177-1.1570 range that's been seen since the start of the year. We expect the directional bias will remain to the downside, with incoming U.S. data to show relative robustness of the economy, despite last week's brief inversion of the 3-month versus 10-year yield spread (which many see as a harbinger of recession). EUR-USD has resistance at 1.1343-45.

    [USD, JPY]
    USD-JPY recovered above 110.0 has sentiment improved during the Europe AM session. The pair had during the Tokyo session printed a six-week low at 109.70 amid a backdrop of sharp equity market losses across bourses in Asia. AUD-JPY also posted a six-week low. USD-JPY has resistance at 111.05-07, and support at 110.25-30.

    [GBP, USD]
    Sterling has come nuder modest pressure, with Cable pegging an intraday low at 1.3167. On the Brexit front, there has been speculation over the weekend that up to 11 of Prime Minister May's cabinet have threatened to resign unless she steps down, although some senior ministers have denied this amid other speculation that she could be making a deal to quit in return for supporting her EU Withdrawal Agreement. The agreement it set to be voted on for a third time, although there has been no confirmation as yet, and probably wouldn't go ahead unless May sees she has sufficient support for it. Parliament will also have a chance this week to form a consensus on alternative Brexit plans, potentially taking control from the government (unprecedented in modern times) on Brexit. If Parliament were to succeed, this would likely mean a soft version of Brexit and quite possibly subject to a ratifying referendum. This scenario would also entail a lengthly delay before the UK left the EU.

    [USD, CHF]
    EUR-CHF has settled in the lower 1.1200s after diving sharply last week to a 10-week low at 1.1212. The rotation lower was a reflection of a broader decline in the Euro, which came amid disappointing Eurozone data (especially the preliminary March PMI survey readings) and a sharp drop in Bund yields, which saw the 10-year benchmark yield go negative for the first time since 2016. The 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 rallied to a two-week high at 1.3439. Friday's 2.5%-plus rout in oil prices coupled with a miss in Canadian retail sales data had sparked selling of Canadian Dollars. The broader risk-off theme in global markets has also been weighing on Canadian currency, along with its Dollar bloc brethren. USD-CAD has support at 1.3358-60.

    Paste link in email or IM