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By XE Market Analysis November 17, 2017 7:27 am
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    XE Market Analysis: North America - Nov 17, 2017

    The dollar is lower on reports about the Trump administration having last month been served a subpoena from the special council Mueller requesting documents relating to Russia, according to the WSJ. Separately, the House Judiciary Committee sent a letter to the attorney of Jared Kushner, Trump's son-in-law and senior advisor, asking for more information about a "Russian backdoor overture and dinner invite." The narrow trade-weighted USD index (DXY) is presently showing a 0.3% loss, earlier logging a two-session low at 93.52. The buck has lost most ground to the yen, the forex market's safe haven unit of choice now that the Swiss franc's status as haven has largely been deconstructed. USD-JPY hit a one-month low of 112.39 during the Tokyo session, since settling around 112.50, which still leaves it with a net decline of 0.4%.

    [EUR, USD]
    .EUR-USD turned lower after a brief foray back above the 1.1800 level, meeting good selling interest above here for a second consecutive day. Overall, there is a lack of strong directional leads. Focus turns to the passage of the Senate tax reform bill after the House passed its version. The data calendars are quiet today on both sides of the Atlantic. EUR-USD has near-term support 1.1755-60.

    [USD, JPY]
    USD-JPY has declined for a fourth consecutive day, this time driven by a bout of general dollar selling during the Tokyo session in an interbank market running for stop loss levels. The pair logged a one-month low at 112.39. The price action affirms an evolving correction following a two-month rally phase from the early September low at 107.31, which capped out at 114.73 in early November. We anticipate further declines. Resistance is at 112.75, which was a former support level, and trend support now comes in at 112.16-17.

    [GBP, USD]
    Sterling has been trading mixed in recent sessions. Forecast-beating retail sales data out of the UK yesterday gave the pound a leg higher earlier, along with affirmation from BoE governor Carney that more rate hikes will be seen if the economy develops along expected lines. though Brexit-related noise seems to have deterred follow-through buying. The Dutch parliament warned its government to start making serious contingency plans for a "no deal" Brexit, which is the latest sign of rising concerns about a lose-lose trade situation in a messy Brexit scenario. Goldman Sachs chief executive Blankfein also tweeted that "many" British CEOs wish for a confirming vote on the decision to leave the EU, to "make sure" that the consensus is still there -- remarks that will doubtlessly prompt a stern rebuttal from Brexiteers as being from a "globalist" interest. Cable has settled around 1.3200 after lifting from levels around 1.3140-50 during the London AM session. The 1.3200-50, approximately the half way mark of a range that's being in play for six weeks now. A series of daily lows that were seen in October between 1.3027 and 1.3039, mark a key support zone.

    [USD, CHF]
    EUR-CHF clocked a 34-month high at 1.1723, subsequently settling back under 1.1700. With the Eurozone gathering growth momentum, and seeming to have conquered existential political threats, we continue to anticipate an eventual return to 1.2000, which is the former trading floor of the SNB.

    [USD, CAD]
    USD-CAD has settled in the mid 1.2700s after logging a three-week low at 1.2665 last week, which reaffirmed an emergent downward trend. The pair's two-month rally phase from sub-1.2100 levels looks to have stalled over the last week or so. BoC Governor Poloz last week reaffirmed guidance given last month by saying that "the economy is likely to require less monetary stimulus over time, we will be cautious in making future adjustments to our policy rate." We project the next BoC rate hike to be in March, and expect USD-CAD to remain in a downward path for now. Resistance is at 1.2700-05, and support is at 1.2600-02.

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