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By XE Market Analysis November 24, 2017 7:05 am
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    XE Market Analysis: North America - Nov 24, 2017

    The dollar traded mixed today, losing ground to the euro and, to a lesser extent, the pound, while grinding higher versus the yen and Canadian dollar, amongst other currencies. Strong data out of the Eurozone, today and yesterday, fed a bid for the euro, while the dollar settled against other currencies today after underperforming yesterday as markets continued to digest the Fed minutes to the recent Fed policy meeting, which had highlighted policymaker concerns about the persistence of benign inflationary readings. EUR-USD breached the mid-November high in making a six-week peak of 1.1874. USD-JPY recouped to levels around 111.50, putting in a little distance from the two-month low seen at 111.06 during early trading yesterday.

    [EUR, USD]
    EUR-USD has rallied to fresh highs, breaching the mid-November high and making a six-week peak of 1.1874 so far. The latest bid was sparked by a strong German Ifo reading, which hit a 20-year high, which follows solid preliminary November PMI survey data out of the Eurozone yesterday. There is also news that Germany's SPD is ready to hold talks with Merkel, raising hopes that the political deadlock may be broken. Markets are also still factoring in the minutes to the recent Fed policy meeting, published on Wednesday, which highlighted policymaker concerns about the persistence of benign inflationary readings. EUR-USD has resistance at 1.1878-80 (which encompasses the October highs). A break and close above here would swing the scopes back on the 1.2000 level. Support is at 1.1810-13.

    [USD, JPY]
    USD-JPY has found a footing, recouping to levels around 111.50, putting in a little distance from the two-month low seen at 111.06 during early trading yesterday. Tokyo markets returned after Japan's holiday yesterday, and the BoJ announced it was reducing the size of its JGB purchases today by Y10 bln. The BoJ news tallies with a Reuters report this week, citing sources, that central bank policymakers are starting to shift out of an ultra-dovish mindset. However, the yen still traded softer despite this, ebbing versus the euro, Australian dollar and other currencies today in the Asia-Pacific session. Mostly higher stock markets in Asia were conducive of a softer yen. We still see USD-JPY's price action this week as having reaffirmed the bearish trend that's been in evolution since early November. The September low at 110.83 provides the next downside waypoint. Resistance is at 111.77-80.

    [GBP, USD]
    The pound has posted modest gains, recouping some of the ground lost to the euro and yen this week while lifting back to within a few pips of the six-week high Cable saw earlier in the week, at 1.3336. There isn't any fresh leads. Both the UK government's fiscal budget and the OBR's growth downgrade were near expectations, so the overall market impact has been correspondingly restrained. An FT report this week attested that the EU and UK have a breakthrough in the works with regard to agreeing on Brexit divorcing terms, though doubts remain, and EU's Juncker said "we'll see" at the December-4 meeting between May, himself and EU chief Brexit negotiation Barnier, whether sufficient progress has been made to move forward. The pound has been broadly holding its own versus the major currencies over the last month or two, and we expect this to remain the case for now, though we still see the balance of risks being skewed to the downside.

    [USD, CHF]
    EUR-CHF has settled in the lower 1.16s having recouped from Monday's swift dive to a 1.1591 low, which was seen as markets reacted to the news that talks to form a coalition government in Germany had collapsed. The cross had posted a 34-month high at 1.1723 on Friday, though with political uncertainties now prevailing in Germany (where new elections may not happen until next March), we expect EUR-CHF to trend sideways, with risks tilted to the downside for now. Key support is at 1.1542-45.

    [USD, CAD]
    USD-CAD vaulted upwards on weak Canadian data yesterday, which has driven the pairing over 50 pips higher in today extending to a 1.2735 high. The pair had before the data clocked an 11-day low at 1.2672, which was seen amid broader weakness in the U.S. dollar. Canadian retail sales data showed a 0.1% m/m rise, well off the median forecast for 1.0% growth. The data accompanies recent BoC policymaker guidance emphasizing that there is no rush to continue with its gradual tightening cycle. USD-CAD has resistance at 1.2730-35 (being tested), and support at 1.2678-80.

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