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By XE Market Analysis October 15, 2019 7:01 am
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    XE Market Analysis: North America - Oct 15, 2019

    The dollar has traded mixed so far today, while a rise the pound has been the biggest mover out of the main currencies. The pound pared gains, having remained below the respective highs seen last Friday against the dollar and yen. The UK currency did managed to eke out a fresh five-month peak in the case against the euro, however. The mood music on the Brexit front has been upbeat, though non-committal. EU negotiator said that an agreement is possible but will be difficult and would have to be committed to legal text by the end of the day if there is to be any chance of a deal being reached at the EU summit on Thursday. Cable has ebbed back to the 1.2650 area after earlier printing a high at 1.2697. EUR-USD took a turn lower, printing a new low for the week at 1.1006. This extends the correction from the three-week seen last Friday at 1.1062, which was the culmination of a 10-day rally phase. USD-JPY continued to hold in a narrow range, pausing after rallying quite strongly last week, which culminated in the 10-week peak that was seen last Friday at 108.62. USD-CAD remained underpinned, concomitant with a second day of oil price declines.

    [EUR, USD]
    EUR-USD has taken a turn lower, printing a new low for the week at 1.1006. This extends the correction from the three-week seen last Friday at 1.1062, which was the culmination of a 10-day rally phase. Bigger picture, EUR-USD has been in a moderate though clear bear trend since early 2018, descending from levels above 1.2500 over this time period. The 28-month low seen on October 1, at 1.0879, marked a reaffirmation of this trend.

    [USD, JPY]
    USD-JPY has been holding a narrow ranges so far this week after rallying quite strongly last week, which culminated in the 10-week peak that was seen last Friday at 108.62. The yen continues to be directionally linked to global stock market direction. Risk appetite soared last week on the progress the U.S. and China made on trade, but the partial deal announced has yet to be signed off on, with Beijing indicating that it wants more talks. USD-JPY has been trending upwards since the August-25 low at 104.45, which is a 35-month nadir. This marks a correction in the bear trend that has been unfolding from the October-28 high at 114.55.

    [GBP, USD]
    The pound is up but not 'up and away', having pulled back from the highs and with the currency having remained below the respective highs seen last Friday against the dollar and yen. The UK currency did managed to eke out a fresh five-month peak in the case against the euro, however. The mood music on the Brexit front has been upbeat, but distinctly non-committal. EU negotiator said that an agreement is possible but will be difficult and would have to be committed to legal text by the end of the day if there is to be any chance of a deal being reached at the EU summit on Thursday. Luxembourg's foreign minister Asselborn said that if an agreement isn't reached by the end of today, another summit would be needed later in the month. The problem with this is that UK law now requires the government to ask for an extension if a deal hasn't been reached by October 19 (Saturday). A emergency session is pencilled in for Saturday, ostensibly to ratify a deal, though it could also permit negotiations to continue on the current deal through to the end of the month. Cable has ebbed back to the 1.2650 area after earlier printing a high at 1.2697.

    [USD, CHF]
    EUR-CHF has been buffeted by Brexit headlines in a will-they-won't-they back and forth regarding the UK and EU chances of reaching a deal, and whether a delay is likely. More of the same seems likely into Thursday's EU summit and the UK's self-imposed deadline of October 19 (Saturday) to achieve a deal (if not, a newly minted law requites the government to ask the EU for an extension). EUR-CHF has today rallied back above 1.1000 after yesterday trading below Friday's low, in making 1.0971. The cross capped out at a 10-week high on Friday at 1.1039.

    [USD, CAD]
    USD-CAD has found a footing after dropping sharply lower in the latter part of last week. Oil prices jumped higher on Friday, supportive for the Canadian currency, but have since dropped back, which has taken the wind out of the sails of the Loonie. The head of OPEC said that the group is thinking of supply curtailment given concerns about flagging global demand. Concerns about demand were also fanned by a batch of weak data out of China this week. USD-CAD has been amid a sideways chop since mid January, ranging from 1.3016 on the downside to 1.3565 on the upside. More of the same looks likely.

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