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By XE Market Analysis November 2, 2018 7:16 am
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    XE Market Analysis: North America - Nov 02, 2018

    Both the Dollar and Yen have been under pressure today against most other currencies. EUR-USD pegged a fresh 9-day high at 1.1445, extending a three-day high rebound from Wednesday's four-month low at 1.1302. The gains was seen despite the final release of the Eurozone's October manufacturing PMI being revised lower to a 26-month low reading of 52.0. USD-JPY traded back on both sides of 113.00 today, printing a two-day high at 113.10 before turning lower, while Yen crosses have rallied amid a backdrop of strongly rebounding global stock markets. The détente between on the U.S. and China on trade, along with overall decent corporate earnings and firm U.S. data have propelled Wall Street higher, while China and Asian stocks, along with European markets, have rallied strongly today. The biggest percentage gainer has been AUD-JPY, which was showing a gain of 0.8% at the highs in what is now its sixth consecutive up day. Cable lifted to a new 10-day high 10-day highs above 1.3030, extending a recovery from the sub-1.2800 levels that were seen on Tuesday. Sterling has been seeing a short-squeeze fuelled rally this week following a period of underperformance, gaining against the Euro, Yen and other currencies, aside from the Dollar. The UK October construction PMI beat expectations at the headline level, but there was sting in the tail as business optimism in the sector fell to a near six-year low. USD-CAD posted an eight-day low at 1.3050.

    [EUR, USD]
    EUR-USD pegged a fresh 9-day high at 1.1445, extending what is now a three-day high rebound from Wednesday's four-month low at 1.1302. We still remain bearish of EUR-USD with signs of flagging economic growth momentum in the Eurozone, along with concerns about the Eurosceptic political movement, juxtaposing a U.S. economy in relative health, which should be evidenced by today's release of the October employment report. We expect a 200k headline rise in U.S. jobs, above the median forecast for 190k, along with a 0.1% rise in hourly earnings and unemployment holding a the cycle low 3.7% rate. EUR-USD resistance comes in at 1.1462-65.

    [USD, JPY]
    USD-JPY has traded back on both sides of 113.00 today, printing a two-day high at 113.10 before turning lower, while Yen crosses have rallied amid a backdrop of strongly rebounding global stock markets. The détente between on the U.S. and China on trade, along with overall decent corporate earnings and firm U.S. data have propelled Wall Street higher, while China and Asian stocks, along with European markets, have rallied strongly today. The biggest percentage gainer has been AUD-JPY, which was showing a gain of 0.8% at the highs in what is now its sixth consecutive up day. USD-JPY's fundamentals (yield differentials and the associated contrast between Fed and BoJ policy paths) remain supportive, although periodic episodes of risk aversion has been an intermittent offsetting bearish force. USD-JPY has support at 112.35-37.

    [GBP, USD]
    Cable lifted to a new 10-day high above 1.3030, extending a recovery from the sub-1.2800 levels that were seen on Tuesday. Sterling has been seeing a short-squeeze fuelled rally this week following a period of underperformance, gaining against the Euro, Yen and other currencies, aside from the Dollar. We don't anticipate the Pound to sustain upside momentum, however -- unless there is a substantive breakthrough on the Irish border issue in Brexit negotiations, which is the principal obstacle in a deal on divorcing terms being made. The BoE left the repo rate at 0.75% yesterday, and QE totals unchanged, as had been widely anticipated. The central bank reaffirmed that gradual tightening remained warranted but caveated that the outlook will "depend significantly on the nature of EU withdrawal." In data today, the UK October construction PMI beat expectations at the headline level, but there was sting in the tail as business optimism in the sector fell to a near six-year low. Cable has support 1.2985-90.

    [USD, CHF]
    EUR-CHF has recouped back above 1.1400, recovering rom the four-week printed at 1.1355 last Wednesday, which extended a descent from levels above 1.1500. The cross has support at 1.1405-10.

    [USD, CAD]
    USD-CAD descended to an eight-day low at 1.3053, despite another sharp leg low in oil prices yesterday, which sent WTI benchmark prices to a seven-month lows near $63.00. Canada's October employment is up today, where we project an expansion of 15.0k after the 63.3k surge in September. USD-CAD has support at 1.3016-20.

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