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By XE Market Analysis October 19, 2018 2:57 pm
    XE Market Analysis's picture
    XE Market Analysis Posts: 3869
    XE Market Analysis: Asia - Oct 19, 2018

    The Dollar slipped some in N.Y. trade on Friday, taking the DXY from near two-week overnight highs of 96.05 to 95.55 lows. Soft U.S. housing data had little impact, and pre-weekend profit taking appeared to have been the main driver, following a week of fairly steady gains. EUR-USD rallied from 1.1458 lows to 1.1535 highs, with the recovery of Italian assets supporting. USD-JPY was range bound between 112.37 and 112.54, while USD-CAD popped to 1.3133 following cooler Canada inflation and soft retail sales data. Cable was steady near 1.3050, later rallying to 1.3104 on reports that the U.K. may abandon its Irish border demands.

    [EUR, USD]
    EUR-USD is on session highs in light afternoon Friday trade, topping at 1.1535, and coming from early lows of 1.1458. The late day recovery of Italian assets, which had been well underwater this morning appears to have helped the Euro out this afternoon. The European Commissioner said the EU will not interfere in the new government's economic policies. The EU said in a letter earlier this week that the proposed spending plans are excessive, which added to pressure on assets early today.

    [USD, JPY]
    USD-JPY put in an "inside day" on Friday, ranging between 112.37 and 112.65 in N.Y. dealings. The highs came early as Wall Street opened with solid gains, though softer housing data saw the dollar fade from there. The pairing has been hemmed in between its 50-day moving average of 111.97 and its 20-day moving average at 112.98 since Wednesday. Dollar fundamentals remain strong, though given the on-again, off-again risk backdrop, USD-JPY upside may be limited for the time.

    [GBP, USD]
    Cable settled around the 1.3050 level in early N.Y. afternoon trade, earlier posting a two-week low at 1.3011 that was seen during the London AM session. The EU's chief Brexit negotiator Barnier earlier admitted that the Irish border problem could sink Brexit talks. Though after the London close, news that the U.K. may drop Brexit demands on the Irish border surfaced, according to Bloomberg, which saw the Pound rally to 1.3104 highs from near 1.3050.

    [USD, CHF]
    EUR-CHF rallied to 1.1490 highs in N.Y. on Friday, as the Euro bounced on the back of calming Italy tensions. The European Commissioner said the EU will not interfere in the new government's economic policies.

    [USD, CAD]
    USD-CAD rallied to a better than one-month high of 1.3119 from near 1.3040 following the cooler Canada CPI numbers, and weak retail sales outcome. The pairing had faded to 1.3028 lows overnight on firmed oil prices, but the data obviously trumped market sentiment. USD-CAD later topped at 1.3133.

    XE Currency Blog

    Topics5728 Posts5773
    By xemarketanalysis October 19, 2018 12:53 pm
      xemarketanalysis's picture
      xemarketanalysis Posts: 539
      XE Market Analysis: The Canadian Loonie Nosedives as Economic Data Causes Turbulence

      OVERVIEW

      • The US Dollar moves to a three-week high against the G-10 currencies as market fear eases 
      • Italian yield spread against German bond fund widens over Italy's spending plan
      • NYMEX WTI Crude cracks below $70.00 a barrel, down 90 cents on the day.

      HIGHLIGHT

      The South African Rand continues to advance for the second week as foreign investors return. ZAR appreciated slightly above 1% against the Greenback this week. The Central Bank expects inflation to accelerate and believes the next move will be a hike. The economy is expected to bounce back from the current recession over the next two years with more fiscal and structural changes.

      US DOLLAR

      A resurgent US Dollar is looking to close the week on a strong note with investors spurning the Euro and the Pound Sterling over growing uncertainty in the region. The common currency touched a 2-month low, Italian 10-year yield spread over Germany widening further after EU slammed Italians’ spending plans. The UK’s exit plan from the EU Bloc may take longer than expected. In a world when things happen almost instantly, the delay is infusing more uncertainties for businesses and the markets. The economic calendar is thin today. We expect the market to remain cautious and to be dictated by risks advertised in the headlines.

      BRITISH POUND

      The Sterling continues to trade near a 13-day low after the EU, and the UK failed to agree on a viable Brexit plan at the Brussel summit.  With five months to go, both sides are far from agreeing to the future Irish border. PM May delaying tactics will also add to the growing uncertainty. The GBP/USD pair has lost nearly 1% this week as doubt takes its toll in the currency.

      EURO

      The Sterling continues to trade near a 13-day low after the EU, and the UK failed to agree on a viable Brexit plan at the Brussel summit.  With five months to go, both sides are far from agreeing to the future Irish border. PM May delaying tactics will also add to the growing uncertainty. The GBP/USD pair has lost nearly 1% this week as doubt takes its toll in the currency.

      CANADIAN DOLLAR

      The Canadian Loonie took a nosedive to a five-week low after data came below estimates this morning. Headline inflation fell to 1.9% from 2.0% in August, while retail sales declined by 0.1%. Sales numbers were down in 7 of 11 subsectors for August. The Bank of Canada meets next week, and the incoming data may tamper the expectations of a rate hike.

       

      AUSTRALIAN DOLLAR

      The Aussie Dollar is posting rare gains against the Greenback after Beijing said it would support the Chinese economy and stock market. It came as a relief after China, which is Australia’s largest trading partner, missed its GDP estimates. The AUD is looking to close the week up 0.4% and remains in a consolidation zone.

       

      FEATURED CURRENCY

      XE Currency Blog

      Topics5728 Posts5773
      By xemarketanalysis October 19, 2018 11:38 am
        xemarketanalysis's picture
        xemarketanalysis Posts: 539
        XE Market Analysis: The Canadian Loonie Nosedives as Economic Data Causes Turbulence

        OVERVIEW

        • The US Dollar moves to a three-week high against the G-10 currencies as market fear eases 
        • Italian yield spread against German bond fund widens over Italy's spending plan
        • NYMEX WTI Crude cracks below $70.00 a barrel, down 90 cents on the day.

        HIGHLIGHT

        The South African Rand continues to advance for the second week as foreign investors return. ZAR appreciated slightly above 1% against the greenback this week. The Central Bank expects inflation to accelerate and believes the next move will be a hike. The economy is expected to bounce back from the current recession over the next two years with more fiscal and structural changes.

        US DOLLAR

        A resurgent US Dollar is looking to close the week on a strong note with investors spurning the Euro and the Pound Sterling over growing uncertainty in the region. The common currency touched a 2-month low, Italian 10-year yield spread over Germany widening further after EU slammed Italians’ spending plans. The UK’s exit plan from the EU Bloc may take longer than expected. In a world when things happen almost instantly, the delay is infusing more uncertainties for businesses and the markets. The economic calendar is thin today. We expect the market to remain cautious and to be dictated by risks advertised in the headlines.

        BRITISH POUND

        The Sterling continues to trade near a 13-day low after the EU, and the UK failed to agree on a viable Brexit plan at the Brussel summit.  With five months to go, both sides are far from agreeing to the future Irish border. PM May delaying tactics will also add to the growing uncertainty. The GBP/USD pair has lost nearly 1% this week as doubt takes its toll in the currency.

        EURO

        The Euro extended its decline against the US dollar as market bears went on a selling spree. EUR/USD touched a 9-day low over renewed tensions between the EU and Italy over the budget.  Risk aversion is widening the Italian-German yield spread to multi-year highs. In the absence of positive data out of the Eurozone, we expect the common currency to remain bearish.

        CANADIAN DOLLAR

        The Canadian Loonie took a nosedive to a five-week low after data came below estimates this morning. Headline inflation fell to 1.9% from 2.0% in August, while retail sales declined by 0.1%. Sales numbers were down in 7 of 11 subsectors for August. The Bank of Canada meets next week, and the incoming data may tamper the expectations of a rate hike.

        AUSTRALIAN DOLLAR

        The Aussie Dollar is posting rare gains against the Greenback after Beijing said it would support the Chinese economy and stock market. It came as a relief after China, which is Australia’s largest trading partner, missed its GDP estimates. The AUD is looking to close the week up 0.4% and remains in a consolidation zone.

        FEATURED CURRENCY

        The Japanese Yen weakened against the Greenback after China signaled that it would provide support to stem any sell-offs in the equity market. The USD/JPY is trading 0.4% higher on the day. Comments from BoJ Kuroda is also contributing to the soft yen; the central bank is expected to stick to its current easing monetary policy. Fed speakers are scheduled Fed we will watch to see if they re-ignite hawkish comments.

        XE Currency Blog

        Topics5728 Posts5773
        By XE Market Analysis October 19, 2018 6:56 am
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          XE Market Analysis Posts: 3869
          XE Market Analysis: North America - Oct 19, 2018

          The Dollar has been choppy but traded moderately softer, on net, giving back some of its recent gains. EUR-USD lifted back above 1.1460 after earlier printing a 10-day low at 1.1433, coming within 1 pip of the October-9 low, which is a two-month nadir. This is the fourth consecutive day the pair has clocked a lower low, and this week is set to be the third down week out of the last four weeks. Cable lifted above 1.3040 after posting has posted a two-week low at 1.3011. AUD-USD and NZD-USD lifted as the antipodean currencies benefited from a solid rally on Chinese stock markets. AUD-USD posted a high of 0.7126. USD-JPY traded firmer, as have EUR-JPY and other Yen crosses, concurrently with a lift S&P 500 futures and a rally in Chinese stock markets, where the SSE index closed with a 2.6% gain following a raft of sentiment-boosting rhetoric by Beijing, and with the PBoC making a fresh liquidity injection. The PB0C also set the USD-CNY reference rate higher, at 6.9387 after 6.9275 yesterday, with is the lowest reference rate for the Yuan since January 2017.

          [EUR, USD]
          EUR-USD printed a 10-day low at 1.1433, coming within 1 pip of the October-9 low, which is a two-month nadir. This is the fourth consecutive day the pair has clocked a lower low, and this week is set to be the third down week out of the last four weeks, with the Euro breaking out of what had been a broadly sideways chop that had been persisting for a month. While the Dollar is benefiting from the Fed's tightening course, the Euro side of the coin is plagued by signs of flagging economic momentum and rising yields in the Eurozone periphery, with Portuguese, Spanish and Italian 10-year yields all rising by 7.0 bp or more today, which is a reflector of investor anxiety about the Eurozone. We anticipate EUR-USD will revisit the August low at 1.1301, which a 16-month low. Resistance comes in at 1.1485.

          [USD, JPY]
          USD-JPY has traded firmer, as have EUR-JPY and other Yen crosses. This saw the Japanese currency unwind gains seen during the New York PM session yesterday, when the currency had found safe haven demand as Wall Street came under pressure following some corporate earnings misses, which drove the S&P 500 and Nasdaq to respective closing losses of 1.4% and 2.1%. Subsequent to this, S&P 500 futures have rebounded by 0.5% in overnight trading, while Chinese indexes have rallied by over 2% following concerted verbal interventions by Chinese authorities (China's Statistics bureau said economic fundamentals are sound, the Banking and Insurance Regulatory Commission declared systemic risks to be under control while the PBoC governor stated that market valuations are at low levels). The PB0C also set the USD-CNY reference rate higher, at 6.9387 after 6.9275 yesterday. All this helped offset misses in China Q3 GDP, which came in at 6.5%, below the median forecast for 6.6%, and production. The rally in China helped lift the mood across Asian bourses, although Japan and others still posted losses. This backdrop helped the Yen decline. USD-JPY recouped above 112.50 after seeing a four-day low in New York at 111.94. Fundamentals (yield differentials and the associated contrast between Fed and BoJ policy paths) remain supportive for USD-JPY, but the periodic spectre of risk aversion has been an offsetting bearish force. USD-JPY has resistance is at 113.07-10.

          [GBP, USD]
          Cable has posted a two-week low at 1.3011. Against the euro, the pound is trading near the halfway mark of the range that's been seen over the last week or so. Market participants are taking a sanguine view of the risk of a no-deal Brexit, although the risk of a cliff-edge departure seems more tangible after the EU-27 cancelled the special summit for Brexit that had been earmarked for mid November. We continue to expect that the UK's parliament will ultimately stop a no-deal scenario of happening (which might in the end take a new referendum or a general election), while the EU's offer of an extended transition period, which will be granted once a deal is struck, has helped allay concerns after this week's Brussels summit, once heralded as a make-or-break threshold, came and went in Groundhog-Day manner. Prime Minister May looks to be snared in what has been called the "hard Brexit trap", which is how to solve the politically imperative problem of preserving a free-flowing border between Ireland and Northern Ireland while exiting both the EU's customs union and single market. Cable has support at 1.3039-43 (which encompasses both the 50- and 100-day moving averages).

          [USD, CHF]
          EUR-CHF has tracked EUR-USD lower, making an eight-day low at 1.1399, putting the cross nearly a big figure down from the two-month high that was seen last week at 1.1492. The cross has resistance at 1.1445.

          [USD, CAD]
          USD-CAD printed a near six-week high at 1.3089. The high has been a product of broader strength in the U.S. Dollar along with a 4%-plus dive in oil prices this week, which has weighted on the Canadian currency. Canada releases September CPI today, which is seen rising 0.1% on a month comparable basis after the 0.1% rise in August. Annual CPI growth is projected to slow to a 2.7% y/y pace in September from 2.8% in August and the lofty 3.0% growth rate in July, adding further support to the Bank's view that the run-up in CPI through July was due to temporary factors that are now unwinding. August retail sales (Friday) are expected to improve 0.6% after the 0.3% gain in July. Overall, the data should be supportive for the Canadian currency. We expect the BoC to hike 25 bp at the October 24 announcement and have pencilled in three to four 25 bp rate hikes in 2019.

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          Topics5728 Posts5773
          By XE Market Analysis October 19, 2018 3:56 am
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            XE Market Analysis Posts: 3869
            XE Market Analysis: Europe - Oct 19, 2018

            The Dollar has held firm against most currencies during the Asian session, into the open of the London interbank market, although slightly off highs seen during the New York afternoon yesterday. EUR-USD found a footing above 1.1450 after posting a 10-day low at 1.1449. Cable also steadied after seeing an eight-day low at 1.3015. USD-JPY has traded firmer, as have EUR-JPY and other Yen crosses. This saw the Japanese currency unwind gains seen during the New York PM session yesterday, when the currency had found safe haven demand as Wall Street came under pressure following corporate earnings misses, which drove the S&P 500 and Nasdaq to respective closing losses of 1.4% and 2.1%. Subsequent to this, S&P 500 futures have rebounded by 0.5% in overnight trading, while Chinese indexes have rallied by over 2% following concerted verbal interventions by Chinese authorities (China's Statistics bureau said economic fundamentals are sound, the Banking and Insurance Regulatory Commission declared systemic risks to be under control while the PBoC governor stated that market valuations are at low levels). The PB0C also set the USD-CNY reference rate higher, at 6.9387 after 6.9275 yesterday. All this helped offset misses in China Q3 GDP, which came in at 6.5%, below the median forecast for 6.6%, and production. The rally in China helped lift the mood across Asian bourses, although Japan and others still posted losses. This backdrop helped the Yen decline. USD-JPY recouped to the 112.50-52 area in Tokyo after seeing a four-day low in New York at 111.94.

            [EUR, USD]
            EUR-USD found a footing above 1.1450 after posting a 10-day low at 1.1449. The pair has been in a broadly sideways chop for nearly a month now, though we still place greater odds for there being a sustained move to the downside than for a sustain move to the upside. A key level on the downside is 1.1430-35. While the Dollar is benefiting from the Fed's tightening course, the Euro side of the coin is plagued by signs of economic slowdown (witness the unusually large drop in the German ZEW investor sentiment survey for October and recent weakness in manufacturing data) and concerns about the rise in Eurosceptic political parties in Italy, Germany and elsewhere. Brexit has also come in to sharp focus, which is a potential negative for the common currency given the seemingly insuperable problem that the Irish border is presenting. EUR-USD has resistance at 1.1534-35.

            [USD, JPY]
            USD-JPY has traded firmer, as have EUR-JPY and other Yen crosses. This saw the Japanese currency unwind gains seen during the New York PM session yesterday, when the currency had found safe haven demand as Wall Street came under pressure following some corporate earnings misses, which drove the S&P 500 and Nasdaq to respective closing losses of 1.4% and 2.1%. Subsequent to this, S&P 500 futures have rebounded by 0.5% in overnight trading, while Chinese indexes have rallied by over 2% following concerted verbal interventions by Chinese authorities (China's Statistics bureau said economic fundamentals are sound, the Banking and Insurance Regulatory Commission declared systemic risks to be under control while the PBoC governor stated that market valuations are at low levels). The PB0C also set the USD-CNY reference rate higher, at 6.9387 after 6.9275 yesterday. All this helped offset misses in China Q3 GDP, which came in at 6.5%, below the median forecast for 6.6%, and production. The rally in China helped lift the mood across Asian bourses, although Japan and others still posted losses. This backdrop helped the Yen decline. USD-JPY recouped to the 112.50-52 area in Tokyo after seeing a four-day low in New York at 111.94. Fundamentals (yield differentials and the associated contrast between Fed and BoJ policy paths) remain supportive for USD-JPY, but the spectre of risk aversion has been an offsetting bearish force. USD-JPY has resistance is at 113.07-10.

            [GBP, USD]
            Cable has posted a two-week low at 1.3015. Against the euro, the pound is trading near the halfway mark of the range that's been seen over the last week or so. Market participants are taking a sanguine view of the risk of a no-deal Brexit, although the risk of a cliff-edge departure seems more tangible after the EU-27 cancelled the special summit for Brexit that had been earmarked for mid November. We continue to expect that the UK's parliament will ultimately stop a no-deal scenario of happening (which might in the end take a new referendum or a general election), while the EU's offer of an extended transition period, which will be granted once a deal is struck, has helped allay concerns after this week's Brussels summit, once heralded as a make-or-break threshold, came and went in Groundhog-Day manner. Prime Minister May looks to be snared in what has been called the "hard Brexit trap", which is how to solve the politically imperative problem of preserving a free-flowing border between Ireland and Northern Ireland while exiting both the EU's customs union and single market. Cable has support at 1.3039-43 (which encompasses both the 50- and 100-day moving averages).

            [USD, CHF]
            EUR-CHF has tracked EUR-USD lower, making an eight-day low at 1.1399, putting the cross nearly a big figure down from the two-month high that was seen last week at 1.1492. The cross has resistance at 1.1445.

            [USD, CAD]
            USD-CAD printed a near six-week high at 1.3089. The high has been a product of broader strength in the U.S. Dollar along with a 4%-plus dive in oil prices this week, which has weighted on the Canadian currency. Canada releases September CPI today, which is seen rising 0.1% on a month comparable basis after the 0.1% rise in August. Annual CPI growth is projected to slow to a 2.7% y/y pace in September from 2.8% in August and the lofty 3.0% growth rate in July, adding further support to the Bank's view that the run-up in CPI through July was due to temporary factors that are now unwinding. August retail sales (Friday) are expected to improve 0.6% after the 0.3% gain in July. Overall, the data should be supportive for the Canadian currency. We expect the BoC to hike 25 bp at the October 24 announcement and have pencilled in three to four 25 bp rate hikes in 2019.

            XE Currency Blog

            Topics5728 Posts5773
            By XE Market Analysis October 18, 2018 2:55 pm
              XE Market Analysis's picture
              XE Market Analysis Posts: 3869
              XE Market Analysis: Asia - Oct 18, 2018

              The dollar index rallied to eight-session highs of 95.97 in N.Y. on Thursday, with gains coming on safe-haven flows into the Greenback. It was another risk-off session, with threats of Fed rate hikes, coupling with the Saudi situation, and ongoing European concerns over Italy. EUR-USD slid to 1.1455 lows after topping at 1.1516. The risk-sensitive USD-JPY bucked the trend, falling to 111.95 as Wall Street melted down. USD-CAD topped at 1.3088 as oil prices printed trend lows. Cable remained under pressure, bottoming at 1.3020, with no light seen at the end of the Brexit tunnel.

              [EUR, USD]
              EUR-USD fell to eight-session lows of 1.1455, as the dollar (and Yen) see safe-haven inflows amid the risk-off backdrop. Euro weakness has been a factor as well, as Italy continues to weigh. The fiscal plan of the new Eurosceptic coalition government in Italy remains at issue, with both ECB and EU officials continuing to warn that rising debt won't solve Italy's problems and with the EU Commission on a course to reject Italy's projections. Eur-USD October 9 low of 1.1430 is the next support level.

              [USD, JPY]
              USD-JPY fell from earlier highs of 112.62, bottoming at 111.95 in concert with Wall Street's slide. The risk-backdrop continues to influence the pairing, though it remains about in the middle of its one-week trading range. The 50-day moving average at 111.94 provides the next support level.

              [GBP, USD]
              Cable fell to two-week lows of 1.3020, down from earlier highs at 1.3131. Market participants are taking a sanguine view of the risk of a no-deal Brexit, although the risk of a cliff-edge departure seems more tangible after the EU-27 cancelled the special summit for Brexit that had been earmarked for mid November. We continue to expect that the UK's parliament will ultimately stop a no-deal scenario from happening (which might in the end take a new referendum or a general election), while the EU's offer of an extended transition period, which will be granted once a deal is struck, has helped allay concerns after this week's Brussels summit, once heralded as a make-or-break threshold, came and went with little fanfare.

              [USD, CHF]
              EUR-CHF pulled back to 1.1401 lows in N.Y. on Thursday, as the Euro came under pressure. The losses came in concert with another sell-off in Italian markets.

              [USD, CAD]
              USD-JPY fell from earlier highs of 112.62, bottoming at 111.95 in concert with Wall Street's slide. The risk-backdrop continues to influence the pairing, though it remains about in the middle of its one-week trading range. The 50-day moving average at 111.94 provides the next support level.

              XE Currency Blog

              Topics5728 Posts5773
              By xemarketanalysis October 18, 2018 2:19 pm
                xemarketanalysis's picture
                xemarketanalysis Posts: 539
                XE Market Analysis: Sterling hits 10 day low as Words from PM May Disappoint

                OVERVIEW

                • The Pound weakened to a 10-day low against the Dollar following PM May's speech at the potentially pivotal EU Summit in Brussels. 
                • Higher Treasury yields boosted the Dollar following positive news from the US Federal Reserve Meeting Minutes
                • The Canadian Dollar fell to a one-week low point due to a sharp drop in oil prices

                HIGHLIGHT

                The Pound is much weaker today against the US Dollar as PM May stated that the EU's proposal for the Irish Border was unacceptable, and considered extending the Brexit transition period by another year.

                US DOLLAR

                The US Dollar strengthened today as a result of the Federal Reserve's meeting minutes stating that interest rates could be raised more aggressively in the near term. This move boosted the Greenback, despite President Trump's warning to the Fed that interest rates had already gone too far.  

                BRITISH POUND

                The Pound is trading lower today as Prime Minister Theresa May stated that the European Union's proposition over the Irish Border was unacceptable. This declaration, alongside a suggestion from EU Officials to extend the Brexit period by up to another year, has sent Sterling into retreat by as much as 0.5% against the US Dollar and 0.4% against the Euro.

                EURO

                The Euro lost some ground today as expected with the news that Brexit talks had hit an impasse. As expected, a negative Brexit headline sent the Euro downward, but not to the extreme decline of the Pound. 

                CANADIAN DOLLAR

                The Canadian Dollar is weaker against the Greenback today as oil prices extended their decline. Oil prices fell to a one-month low, down by around 1.5% to $68.73 per barrel. Oil is one of Canada's main exports, which caused a USD CAD change of over 0.3% higher today. 

                AUSTRALIAN DOLLAR

                The Australian Dollar is widely unchanged today, but we expect there to be volatility due to disappointing Chinese results on GDP, retail sales and industrial production which will be released later today. Chinese data is a mover of the Aussie as the majority of imports are Chinese.

                FEATURED CURRENCY

                XE Currency Blog

                Topics5728 Posts5773
                By XE Market Analysis October 18, 2018 7:25 am
                  XE Market Analysis's picture
                  XE Market Analysis Posts: 3869
                  XE Market Analysis: North America - Oct 18, 2018

                  The Dollar has traded softer during the European AM session interbank open after firming during the Asian session. EUR-USD flipped back above 1.1500 after posting an eight-day low at 1.1481, which was the culmination of a Dollar ascent following the Fed minutes to the late-September FOMC meeting, which revealed policymakers remaining committed to gradual tightening. USD-JPY dipped under 112.50 area after earlier edging out an eight-day high at 112.71. BoJ Governor Kuroda repeated the central bank's boilerplate message, that policy will remain accommodative for an extended period. The Yuan weakened after the U.S. Treasury declared that China was not a forex manipulator (no doubt to the chagrin of President Trump). The PBoC set the reference rate for USD-CNY higher, at 6.9275, up markedly from 6.9103 yesterday, before the Yuan extended declines further, putting the Chinese currency at its lowest levels since January 2017. The Yuan has declined by just over 10% versus the Dollar since April. Cable was unperturbed by a miss in UK September retail sales, which contracted by 0.8% m/m, more the median for -0.4% m/m. Cable recouped back above 1.3100 after posting a nine-day low at 1.3076 just ahead of the London interbank open. The low was seen after the EU-27 cancelled the special summit for Brexit that had been earmarked for mid November. AUD-USD rose over 0.5% in posting a high at 0.7147, which was seen after Australian September unemployment dropped to 5.0% from 5.3% in August.

                  [EUR, USD]
                  EUR-USD flipped back above 1.1500 after posting an eight-day low at 1.1481. The low was seen following the release of the Fed minutes to the late-September FOMC meeting, which revealed policymakers remaining committed to gradual tightening. EUR-USD has been in a broadly sideways chop for nearly a month now, though we still place greater odds for there being a sustained move to the downside than for a sustain move to the upside. The Euro side of the coin is plagued by signs of economic slowdown (witness the unusually large drop in the German ZEW investor sentiment survey for October and recent weakness in manufacturing data) and concerns about the rise in Eurosceptic political parties in Italy, Germany and elsewhere. Brexit has also come in to sharp focus, which is a potential negative for the common currency given the seemingly insuperable problem that the Irish border is presenting. EUR-USD has resistance at 1.1534-35.

                  [USD, JPY]
                  USD-JPY dipped to the 112.50 area after earlier edging out an eight-day high at 112.71. Higher Treasury yields was the inspiration for the new high, which followed the release of the Fed minutes to the late-September FOMC meeting, which revealed policymakers remaining committed to its gradual tightening course. Risk appetite soured as the Asia session progressed, however, which in turn led to modest Yen buying, putting a cap on USD-JPY and Yen crosses. BoJ Governor Kuroda repeated the central bank's boilerplate message, that policy will remain accommodative for an extended period. The U.S. Treasury declared that China was not a forex manipulator, which prompted fresh weakness in the Yuan today. Fundamentals (yield differentials and the associated contrast between Fed and BoJ policy paths) remain supportive for USD-JPY, but the spectre of risk aversion has been an offsetting bearish force. Resistance is at 113.07-10, and support at 112.20.

                  [GBP, USD]
                  Sterling has continued to hold up, with portfolio and reserve managers remaining sanguine to the risk of a no-deal Brexit, although the risk of a cliff-edge departure seems more tangible after the EU-27 cancelled the special summit for Brexit that had been earmarked for mid November. The president of the European Council Tusk called on the UK government to come up with creative solutions to solve what has increasingly seemed an insoluble Irish border problem. The EU left the door open to a special summit should progress be made, and offered the carrot of a longer transition period, although the major known unknown is whether Prime Minister May can reach a deal with the EU that would in turn find sufficient support at a House or Commons vote. There remain five different possible scenarios: a no-deal Brexit, a Canada+ type of hard Brexit, a Chequers-plan Brexit, a Norway-model style soft Brexit, and a let's-call-the-whole-thing-off option, whereby the UK decides on remaining in the EU (which could only happen after a new referendum or general election). May has continued to push an evolved version of her so-called Chequers plan, which looks to be a no-go for the EU (crossing red lines by demanding cherry-picked access to the single market), while the Canada+ option, like Chequers, would be dogged by finding a solution to the Irish border problem.

                  [USD, CHF]
                  EUR-CHF has settled near 1.1450, below the two-month high seen last week at 1.1492. The gains were concomitant with a calming in Italian asset markets, although the jury remains out with regard to the credibility and stability of the populist coalition government. The cross has resistance at 1.1537-40.

                  [USD, CAD]
                  USD-CAD has lifted to a one-week high of 1.3055 in the wake of the Fed minutes to the late-September FOMC meeting, which showed policymakers remaining committed to a gradual tightening course. A near 3% dive in oil price was also in the mix, as this weighed on the Canadian Dollar. Canada releases September CPI on Friday, which is seen rising 0.1% on a month comparable basis after the 0.1% rise in August. Annual CPI growth is projected to slow to a 2.7% y/y pace in September from 2.8% in August and the lofty 3.0% growth rate in July, adding further support to the Bank's view that the run-up in CPI through July was due to temporary factors that are now unwinding. August retail sales (Friday) are expected to improve 0.6% after the 0.3% gain in July. Overall, the data should be supportive for the Canadian currency. We expect the BoC to hike 25 bp at the October 24 announcement and have pencilled in three to four 25 bp rate hikes in 2019.

                  XE Currency Blog

                  Topics5728 Posts5773
                  By XE Market Analysis October 18, 2018 3:55 am
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                    XE Market Analysis Posts: 3869
                    XE Market Analysis: Europe - Oct 18, 2018

                    The Dollar has traded mostly firmer in the wake of the release of the Fed minutes to the late-September FOMC meeting, which revealed policymakers remaining committed to gradual tightening. The USD index (DXY) has printed an eight-day high at 95.75, and is now up by just over 1% from the three-week low that was seen on Tuesday. EUR-USD has concurrently posted an eight-day low, at 1.1482, and USD-JPY and eight-day high, at 112.71. Moderate demand for the Yen amid a souring in risk appetite across Asian stock markets has seen USD-JPY ebb back some. The U.S. Treasury declared that China was not a forex manipulator (no doubt to the chagrin of President Trump), which prompted fresh weakness in the Yuan today. The PBoC set the reference rate for USD-CNY higher, at 6.9275, up markedly from 6.9103 yesterday, before the Yuan extended declines further, putting the Chinese currency at its lowest levels since January 2017. The Yuan has declined by just over 10% versus the Dollar since April.

                    [EUR, USD]
                    EUR-USD fell to an eight-day low, at 1.1482, on the back of Dollar firmness. This followed the release of the Fed minutes to the late-September FOMC meeting, which revealed policymakers remaining committed to gradual tightening. The Euro side of the coin is plagued by signs of economic slowdown (witness yesterday's unusually large drop in the German ZEW investor sentiment survey for October and recent weakness in manufacturing data) and concerns about the rise in Eurosceptic political parties in Italy, Germany and elsewhere. Brexit has also come in to sharp focus into today's EU summit in Brussels, which is a potential negative for the common currency given the seemingly insuperable problem that the Irish border is presenting. EUR-USD has been in a broadly sideways chop for nearly a month now, though we still place greater odds for there being a sustained move to the downside than for a sustain move to the upside. Resistance is at 1.1534-35.

                    [USD, JPY]
                    USD-JPY has traded moderately lower on the back of Yen strength as equity markets declined in Asia after Wall Street closed near flat. The pair dipped to the 112.50 area after earlier edging out an eight-day high at 112.71. Higher Treasury yields was the inspiration for the new high, which followed the release of the Fed minutes to the late-September FOMC meeting, which revealed policymakers remaining committed to its gradual tightening course. Risk appetite soured as the Asia session progressed, however, which in turn led to Yen buying, putting a cap on USD-JPY and Yen crosses. BoJ Governor Kuroda repeated the central bank's boilerplate message, that policy will remain accommodative for an extended period. The U.S. Treasury declared that China was not a forex manipulator, which prompted fresh weakness in the Yuan today. Fundamentals (yield differentials and the associated contrast between Fed and BoJ policy paths) remain supportive for USD-JPY, but the spectre of risk aversion has been an offsetting bearish force. Resistance is at 113.07-10, and support at 112.20.

                    [GBP, USD]
                    Sterling has drifted lower versus the Dollar and Yen while holding relatively steady against the Euro. The EU-17 did the expected at the Brussel's summit on Brexit yesterday and cancelled the special summit for Brexit that had been earmarked for mid November citing a lack of progress while calling on the UK government to come up with creative solutions to solve the seemingly insoluble Irish border issue. The EU still left the door open to a summit should progress be made, and offered the carrot of a longer transition period. Cable posted a nine-day low of 1.3076, which extended a decline from Tuesday's high at 1.3237. Softer than expected inflation data out of the UK yesterday had taken a toll on Her Majesty's currency. Regarding Brexit, Sterling markets have remained sanguine to the risk of a no-deal exit, though the risk of a cliff-edge departure is surely rising. Cable has resistance at 1.3107-10.

                    [USD, CHF]
                    EUR-CHF has settled near 1.1450, below the two-month high seen last week at 1.1492. The gains were concomitant with a calming in Italian asset markets, although the jury remains out with regard to the credibility and stability of the populist coalition government. The cross has resistance at 1.1537-40.

                    [USD, CAD]
                    USD-CAD has lifted to a one-week high of 1.3055 in the wake of the Fed minutes to the late-September FOMC meeting, which showed policymakers remaining committed to a gradual tightening course. A near 3% dive in oil price was also in the mix, as this weighed on the Canadian Dollar. Canada releases September CPI on Friday, which is seen rising 0.1% on a month comparable basis after the 0.1% rise in August. Annual CPI growth is projected to slow to a 2.7% y/y pace in September from 2.8% in August and the lofty 3.0% growth rate in July, adding further support to the Bank's view that the run-up in CPI through July was due to temporary factors that are now unwinding. August retail sales (Friday) are expected to improve 0.6% after the 0.3% gain in July. Overall, the data should be supportive for the Canadian currency. We expect the BoC to hike 25 bp at the October 24 announcement and have pencilled in three to four 25 bp rate hikes in 2019.

                    XE Currency Blog

                    Topics5728 Posts5773
                    By xemarketanalysis October 17, 2018 3:30 pm
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                      xemarketanalysis Posts: 539
                      XE Currency Analysis: EU Summit in Brussels in the Spotlight

                      OVERVIEW

                      • Potentially historic EU Summit kicks off in Brussels
                      • Strong round of earnings reports from Wall Street gives strength to USD
                      • Loonie lifted by rally in crude WTI prices

                      HIGHLIGHT

                      A potentially historic EU Summit in Brusssels kicked off today. UK PM Theresa May said a Brexit deal is achievable, and that negotiations have been productive, yet she wouldn't rule out extending the transition period by a year if necessary. EU Chief Brexit Negotiator Michel Barnier is far less enthusiastic, saying 'much more time' is required to make a deal happen.  

                      US DOLLAR

                      Positive earnings results fueled the best day on Wall Street in eight months, which in turn lifted the US Dollar. Fed meeting minutes from September indicate further interest rate increases are to be expected. President Trump has been critical of the Fed lately, and said higher rates are the biggest threat to economic recovery. 

                      BRITISH POUND

                      Currency traders expected Sterling to be weighed down by the EU Summit and they were not wrong.  Cable posted a two-day low at 1.3123, which was seen in the wake of the release of softer than expected inflation data out of the UK. September headline CPI came in at 2.4% y/y, down from 2.7% in August and below the median forecast for 2.6% y/y. 

                      EURO

                      The Euro is under the influence of signs of economic slowdown which caused an unusually large drop in the German ZEW investor sentiment survey for October. Weak manufacturing data is causing negative sentiment on the common currency, along with spats over the Irish border as it relates to Brexit negotiations. 

                      CANADIAN DOLLAR

                      The Canadian Dollar regained some ground on the US Dollar today, on the strength of higher crude WTI costs. The Bank of Canada is expected to follow the lead of the US Treasury and raise interest rates by 25 basis points on October 24th. Manufacturing sales fell by 0.4% in August, giving back nearly half of the gains the sector made in July. A drop of 0.5% was expected. 

                      AUSTRALIAN DOLLAR

                      The AUD-USD pair has been trading in a narrow range below 0.7150, continuing to consolidate above the 32-month low which occured earlier this month at 0.7041.

                      FEATURED CURRENCY

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