Home > XE Currency Blog > XE Market Analysis: North America - Oct 17, 2017

AD

XE Currency Blog

Topics4778 Posts4823
By XE Market Analysis October 17, 2017 7:35 am
    XE Market Analysis's picture
    XE Market Analysis Posts: 3242
    XE Market Analysis: North America - Oct 17, 2017

    EUR-USD declined for a fourth consecutive session, this time logging a out a one-week low at 1.1754, while the common currency has remained heavy after posting lows versus the yen and other currencies yesterday. The prevailing disharmony in Spanish politics is weighing on the euro, particularly news that a Spanish judge has jailed without bail two key members of the Catalan independence movement, which raises concerns that this will only enflame ineradicable-willed Catalan nationalists. Elsewhere, Cable lost some 0.5% in making a low of 1.3198, which is the lowest level seen since last Thursday. The pound also came under pressure versus the euro and yen, among other currencies. Remarks by new BoE MPC member revealed himself as a dove, as he expressed a benign outlook on inflation.

    [EUR, USD]
    EUR-USD declined for a fourth consecutive session, this time logging a out a one-week low at 1.1754, while the common currency has remained heavy after posting lows versus the yen and other currencies yesterday. The prevailing disharmony in Spanish politics is weighing on the euro, particularly news that a Spanish judge has jailed without bail two key members of the Catalan independence movement, which raises concerns that this will only enflame ineradicable-willed Catalan nationalists. Last week's Bloomberg report that the ECB may extend its QE program, albeit at a lower level of asset purchases, has also been a negative for the euro. This backdrop has revived the attractiveness of the dollar, despite last week's U.S. CPI data and FOMC minutes having pruned the strength of Fed tightening expectations. For now, we favour following the nascent down trend in EUR-USD. Trend resistance is at 1.1793-95, and support is at 1.1720-21.

    [USD, JPY]
    USD-JPY flipped back above 112.00 as major Asian stock indices hit 10-year highs after Wall Street hit fresh record highs on Monday. The pair has a well-established tendency to correlate with notable moves in global equity markets. The price action puts in a stop to USD-JPY's downward drift, which has been seen for over a week now after the pair capped out at one-month rally at 113.44. The pairing is now holding up just above its 200-day moving average. We anticipate a phase of limited directional bias. Support is at 111.65 and 111.75-76, and resistance is at 112.39-40.

    [GBP, USD]
    Cable lost some 0.5% in making a low of 1.3198, which is the lowest level seen since last Thursday. The pound also came under pressure versus the euro and yen, among other currencies. Remarks by new BoE MPC member revealed himself as a dove. Testifying before parliament, Ramsden expressing a benign view on inflation, anticipating lower y/y rates as exchange rate base effects drop out of data, noting that there has been little sign of second round inflationary effects and that inflation expectations remain "well anchored." Sterling has seen little reaction thus far to news that British PM May and EU Commission President Juncker agreed at a supper meeting last night that Brexit negotiations should "accelerate over the months to come." Markets may want to see surer signs of this before reacting. We remain Cable bears, seeing scope for a new sub-1.3000 range developing in the weeks ahead.

    [USD, CHF]
    EUR-CHF has settled back around the 1.1500 level after last week capping out a near two-week rally phase at 1.1566, which was the loftiest level seen since September 25. Former EUR-CHF resistance at 1.1488-90 has been acting as a support. We have been anticipating an eventual return to 1.2000, which is the former trading floor of the SNB's, though this assumes that political tensions (Catalonia in particular) don't worsen, as the franc tends to find demand in the face of news developments that are threating to the political integrity of the Eurozone.

    [USD, CAD]
    USD-CAD has found a footing after last Thursday posting a new correction low of 1.2432, which extended the pullback from the recent seven-week peak at 1.2600. The move was driven by broader softness in the U.S. dollar, with the combined impact of the FOMC minutes from the September meeting and sub-forecast U.S. CPI data last week, weakening the conviction of market expectations for a December rate hike. The Canadian dollar, however, is likely to retain a neutral-to-softer bias, with BoC policymakers having actively dispelled any notion that it is on a tightening path. The BoC's quarterly business survey, released yesterday, showed economic activity to be remaining robust in a state of moderation following a strong performance over the summer period.

    Paste link in email or IM