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By XE Market Analysis May 17, 2017 6:22 am
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    XE Market Analysis: North America - May 17, 2017

    The dollar saw fresh lows in the early London session against the euro, yen and a number of other currencies, amid concerns about Trump's leadership. EUR-USD rose to a fresh six-month high of 1.1122, the pair's highest level since the U.S. presidential election last November, before settling just south of 111.00, still well up on last week's low at 1.0839. Final Eurozone inflation figures were confirmed at 1.9% y/y in the HICP measure, as had been widely anticipated. USD-JPY logged a new 12-day low in early European trade at 112.25. Sterling gained amid choppy price action in the wake of UK jobs data today, initially rallying on an unexpected dip in the UK jobless rate to a 12-year low of 4.6%, then more than reversing the gains as the fact of sub-inflation wage growth hit home, before picking up once again. A high was left at 1.2952, leaving yesterday's peak at 1.2958 unchallenged.

    [EUR, USD]
    EUR-USD rose to a fresh six-month high of 1.1122, the pair's highest level since the U.S. presidential election last November, before settling just south of 111.00, still well up on last week's low at 1.0839. Broader dollar weakness has driven the latest upward phase amid concerns about the about the pro-Trump growth agenda. First the Senate Majority Leader McConnell appeared to downplay aspects of the plans for revenue-neutral tax cuts, Dodd-Frank rollback, among other things, and later news erupted about an alleged existence of a potentially Trump-damaging memo written by ex-FBI director Comey. 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 EUR-USD trend over fading. 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 dropped quite sharply, from levels above 113.50 yesterday to a 12-day low today in early European trade at 112.25. Concerns about the about the pro-Trump growth agenda have weighed on the dollar. First the Senate Majority Leader McConnell appeared to downplay aspects of the plans for revenue-neutral tax cuts, Dodd-Frank rollback, among other things, and later news erupted about an alleged existence of a potentially Trump-damaging memo written by ex-FBI director Comey. This rattled Wall Street and led to a mostly negative session across equity bourses in Asia, which in turn let to yen outperformance as market participants sought safe havens. USD-JPY's May-5 low at 112.09 and the 112.00 mark supports, and resistance comes in at 112.63-65.

    [GBP, USD]
    Sterling gained amid choppy price action in the wake of UK jobs data today, initially rallying on the unexpected dip in the jobless rate to a 12-year low of 4.6%, then more than reversing the gains as the fact of sub-inflation wage growth hit home, before picking up once again. A high was left at 1.2952. Yesterday's peak at 1.2958 remains unchallenged so far. Last week's seven-month highs are at 1.2990. Cable has been experiencing a choppy ride in recent sessions, making a low of 1.2865 yesterday despite a spike in headline CPI to 2.7% y/y. We have recently been calling a correction phase in Cable, noting a recent waning in momentum indicators following a two-month rally phase from levels near 1.2100. The May-4 low at 1.2830 provides an initial target. Resistance is at 1.2958 and 1.2990-1.3000.

    [USD, CHF]
    EUR-CHF has drifted to the lower 1.09s, putting in a little distance from the eight-month high that was seen last week at 1.0978. The cross remains well up on the sub-1.07 levels that were prevailing in April before the French presidential elections, which reflects an unwinding in franc safe-haven premium (of which there is still some despite a punishing -0.75% deposit rate).

    [USD, CAD]
    USD-CAD remains heavy, this time amid broader greenback weakness with oil prices consolidating the strong gains that were seen earlier in the week. USD-CAD breached support is 1.3643-47, which now reverts as resistance.

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