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By xemarketanalysis March 26, 2019 10:13 am
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    xemarketanalysis Posts: 627
    XE Market Analysis: Brexit: Ordo Ab Chao or Order from Chaos

    OVERVIEW

    • The Dollar Index makes a comeback, trading firmer against the G-10, near a seven-day high

    • Pound sterling remains volatile as MPs take control over Brexit debate

    • NYMEX WTI jumps to a two- day high, up 1.70% and eyes $60 barrel again

    HIGHLIGHT

    The British pound is trading higher on the day versus the greenback. However, the currency remains volatile with the ongoing Brexit saga. The House of Commons saw another defeat for Theresa May, and the MPs will be voting on several amendments hoping to find a real exit plan. The coming days could be crucial for the PM, the GBP and the business community.

     

    US DOLLAR

    The US dollar is trading higher against most of its major peers amidst easing market worries about yield curve and recession. The DXY gauge is at 96.50, steady around the seven-day high. Stock markets are bouncing back in the green today: Nikkei advanced 2.15%, European stocks are blowing hot and cold and US futures signalling a positive open. The currency market is expected to trade with a mild tone with a focus on US housing starts and more speeches from the members of the Federal Reserve. 

    BRITISH POUND

    Brexit drama is expected to send more shockwaves across the market, as MPs voted to take control and will be holding indicative votes on an “improved” exit plan.  Prime Minister Theresa May could be walking on thin ice after she admitted she did not have “sufficient support” to bring her Withdrawal Plan for a third vote. The MPs voted 329 to 302 to take control of the Parliamentary schedule today and will be holding several indicative votes on the next steps. The UK technically has until April 12th to leave the EU with no deal or “indicate a way forward” to the EC. If the House approves the Withdrawal deal, the departure date will then be on May 22nd. As we approach the last minute, we are likely to see the emergence of an agreement through the market remains uncertain on its shape and form.

    EURO

    EUR/USD remains inside a tight trading range for the second consecutive session. Better-than-expected German GfK data extended little support to the common currency. The mood seems to be improving somewhat, and fewer expect an economic collapse. Uncertainty over Brexit and trade tension between the EU and the US are weighing on sentiment and business decisions.  The 1.13 level remains critical for the euro as investors adopt a cautious approach ahead of Brexit developments.

    CANADIAN DOLLAR

    The Canadian dollar is trading with a firmer tone against the greenback this morning after the WTI gapped higher and approaching the significant $60 a barrel mark. The economic calendar remains light ahead of GDP data releases this Friday, and the US dollar-Canadian dollar pair is expected to move in tandem with oil prices.

    AUSTRALIAN DOLLAR

    Commodity-linked currencies including the NZD have pushed higher against the majors with the British pound the worst performing of the G10 currencies on Brexit concerns. The AUD USD pair sits at 0.71308, down slightly of a high of 0.71328.

    FEATURED CURRENCY

    XE Currency Blog

    Topics6131 Posts6176
    By XE Market Analysis March 26, 2019 7:16 am
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      XE Market Analysis Posts: 4185
      XE Market Analysis: North America - Mar 26, 2019

      The main theme has been Yen weakness, which took hold during the European AM session. This floated USD-JPY to a two-session high at 100.42, putting in a little more distance form the six-week low that was seen yesterday at 109.70. AUD-JPY and EUR-JPY, among other Yen crosses, have also risen, with the Japanese currency seeing some of its safe-haven premium unwind concurrently with a steadying in global stock markets, although sentiment remains palpably fragile as investors continue to fathom the recent sharp dive in U.S. yields and yield curve inversions. Above-forecast French business confidence and German Ifo survey outcomes, in data release today and yesterday, respectively, have been tonic for markets, and participants will be looking to today's U.S. consumer confidence and housing-related data for indication that things may not be as bad as feared in the American economy. In Japan today, the BoJ released its "Summary of Opinions" from the March policy meeting, which argued for "maintaining powerful monetary easing." EUR-USD has continued in a narrow range in the lower 1.1300s, remaining about 50 pips net lower from levels prevailing ahead of the Fed's statement last week, with the foray of Bund yields into negative territory having offset the sharp drop in U.S. yields. Sterling has traded modestly firmer, with Cable printing a four-session high at 1.3251. The UK Parliament's wresting of control of the Brexit process from the Prime Minister May's government, while dramatic, has improved the odds for a "softer" Brexit eventuality.

      [EUR, USD]
      EUR-USD has maintained a narrow range in the lower 1.1300, and remains about 50 pips net lower from levels prevailing ahead of the Fed's statement last week, which reaffirmed the dovish turn it made in January and sparked a near 18 bp dive in the 10-year T-note yield and yield inversions, most notably a brief dip to a negative spread between 3-month and 10-year yields, which is generally seen as a harbinger of recession. One reason the dollar has managed to hold up is because it has been seen as a safe haven, especially with Bund yields having turned negative. Sentiment about the global economy remains fragile. An improvement in French business confidence data today, and yesterday's above-forecast German Ifo surve, have been tonic for nervous investors, who will be looking to today's U.S. consumer confidence and housing-related data for indication that things may not be as bad as feared in the American economy. EUR-USD is settled below the midway level of the 1.1177-1.1570 range that's been seen since the start of the year. We expect the directional bias will remain to the downside, with incoming U.S. data to show relative robustness of the economy. EUR-USD has resistance at 1.1343-45.

      [USD, JPY]
      USD-JPY has lifted to a two-session high of 100.42, putting in a little more distance form the six-week low that was seen yesterday at 109.70. AUD-JPY and EUR-JPY, among other Yen crosses, have also traded firmer. The Japanese currency has seen some of its safe-haven premium unwind concurrently with a steadying in global stock markets, although sentiment remains palpably fragile as investors continue to fathom the recent sharp dive in U.S. yields and yield curve inversions. Above-forecast French business confidence and German Ifo survey outcomes, in data release today and yesterday, respectively, have been tonic for markets, and participants will be looking to today's U.S. consumer confidence and housing-related data for indication that things may not be as bad as feared in the American economy. In Japan, the BoJ released its "Summary of Opinions" from the March policy meeting. This argued for "maintaining powerful monetary easing" in order to sustain momentum for hitting its price goals. The BoJ aimed to keep current policy intact, while watching economic developments and keeping an eye out for the side-effects of stimulus, also ensuring that the fiscal and monetary policy mix is maintained. USD-JPY has resistance at 111.05-07, and support at 110.00.

      [GBP, USD]
      The Pound has continued to hold up well amid ongoing Brexit-related political drama in the UK. Yesterday the government was defeated by 329 votes to 302 on a cross-party amendment setting up a series of indicative votes aimed at developing an alternative plan to Prime Minister May's deal. A third vote on May's deal still hasn't been ruled out, though the lack of an announcement suggests that May has not been able to drum up sufficient support for it. With 30 of May's own Tory MPs, including thee ministers, voting against the government May's deal looks all but dead. A series of votes will take place on Wednesday in the House of Commons. Sterling, although coming under some pressure over the last week or so, continues to hold about a 4% averaged gain versus the dollar, euro and yen on the year so far. Should a cross-party consensus take hold, which looks to have a reasonable chance, this would lift the odds for a softer version of Brexit, which would likely entail a significant delay for such a plan to be developed and negotiated with in Brussels. It could improve the odds for a second referendum on EU membership, too, depending how things evolve.

      [USD, CHF]
      EUR-CHF has settled in the lower 1.1200s after diving sharply last week to a 10-week low at 1.1212. The rotation lower was a reflection of a broader decline in the Euro, which came amid disappointing Eurozone data (especially the preliminary March PMI survey readings) and a sharp drop in Bund yields, which saw the 10-year benchmark yield go negative for the first time since 2016. The cross has been seeing choppy directional impulses since the start of the year, often times characterized by bouts of pronounced underperformance in the Swiss franc that have often been accompanied by talk/suspicions of SNB intervention.

      [USD, CAD]
      USD-CAD has settled moderately lower after peaking at a two-week high at 1.3444 yesterday. Friday's 2.5%-plus rout in oil prices coupled with a miss in Canadian retail sales data had sparked selling of Canadian Dollars. The broader risk-off theme in global markets has also been weighing on Canadian currency, along with its Dollar bloc brethren. USD-CAD has support at 1.3358-60.

      XE Currency Blog

      Topics6131 Posts6176
      By XE Market Analysis March 26, 2019 4:46 am
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        XE Market Analysis Posts: 4185
        XE Market Analysis: Europe - Mar 26, 2019

        Most Dollar pairings have remained within Monday ranges so far, although the Australian and Canadian Dollars managed to eke out respective three- and two-session highs against the U.S. buck. This was seen amid a steadying in global stock markets, although sentiment remains fragile as investors continue to fathom the recent sharp dive in U.S. yields and yield curve inversions. Yesterday's above-forecast German Ifo survey was tonic for markets, and participants will be looking to today's U.S. consumer confidence and housing-related data for indication that things may not be as bad as feared in the American economy. EUR-USD has maintained a narrow range in the lower 1.1300s, while USD-JPY has held within about a 25 pip range in the lower 110.0s. Despite the near 18 bp dive in the 10-year T-note yield since the Fed's statement last week, the dollar has held up well, underpinned by a degree safe have demand. Fed funds rate futures are fully discounting a 25 bp rate cut later this year, with about 80% odds implied for such as cut as soon as September. Elsewhere, the Pound has continued to hold up well amid ongoing Brexit-related political drama in the UK. Yesterday the government was defeated by 329 votes to 302 on a cross-party amendment setting up a series of indicative votes aimed at developing an alternative plan to Prime Minister May's deal. A third vote on May's deal still hasn't been ruled out, though the lack of an announcement suggests that May has not been able to drum up sufficient support for it. With 30 of May's own Tory MPs, including thee ministers, voting against the government May's deal looks all but dead. A series of votes will take place on Wednesday in the House of Commons.

        [EUR, USD]
        EUR-USD has maintained a narrow range in the lower 1.1300, and remains about 50 pips net lower from levels prevailing ahead of the Fed's statement last week, which reaffirmed the dovish turn it made in January and sparked a near 18 bp dive in the 10-year T-note yield and yield inversions, most notably a brief dip to a negative spread between 3-month and 10-year yields, which is generally seen as a harbinger of recession. One reason the Dollar has managed to hold up is it has itself been seen as a safe haven, especially with Bund yields having turned negative. Sentiment about the global economy remains fragile. Yesterday's above-forecast German Ifo survey was tonic for markets, and participants will be looking to today's U.S. consumer confidence and housing-related data for indication that things may not be as bad as feared in the American economy. EUR-USD is settled below the midway level of the 1.1177-1.1570 range that's been seen since the start of the year. We expect the directional bias will remain to the downside, with incoming U.S. data to show relative robustness of the economy. EUR-USD has resistance at 1.1343-45.

        [USD, JPY]
        USD-JPY has held within about a 25 pip range in the lower 110.0s, holding above the six-week low seen yesterday at 110.70. AUD-JPY and EUR-JPY, among other Yen crosses, have also traded firmer. The Japanese currency has seen some of its safe-haven premium unwind concurrently with a steadying in global stock markets, although sentiment remains fragile as investors continue to fathom the recent sharp dive in U.S. yields and yield curve inversions. Yesterday's above-forecast German Ifo survey was tonic for markets, and participants will be looking to today's U.S. consumer confidence and housing-related data for indication that things may not be as bad as feared in the American economy. In Japan, the BoJ released its "Summary of Opinions" from the March policy meeting. This argued for "maintaining powerful monetary easing" in order to sustain momentum for hitting its price goals. The BoJ aimed to keep current policy intact, while watching economic developments and keeping an eye out for the side-effects of stimulus, also ensuring that the fiscal and monetary policy mix is maintained. USD-JPY has resistance at 111.05-07, and support at 110.00.

        [GBP, USD]
        The Pound has continued to hold up well amid ongoing Brexit-related political drama in the UK. Yesterday the government was defeated by 329 votes to 302 on a cross-party amendment setting up a series of indicative votes aimed at developing an alternative plan to Prime Minister May's deal. A third vote on May's deal still hasn't been ruled out, though the lack of an announcement suggests that May has not been able to drum up sufficient support for it. With 30 of May's own Tory MPs, including thee ministers, voting against the government May's deal looks all but dead. A series of votes will take place on Wednesday in the House of Commons. Sterling, although coming under some pressure over the last week or so, continues to hold about a 4% averaged gain versus the dollar, euro and yen on the year so far. Should a cross-party consensus take hold, which looks to have a reasonable chance, this would lift the odds for a softer version of Brexit, which would likely entail a significant delay for such a plan to be developed and negotiated with in Brussels. It could improve the odds for a second referendum on EU membership, too, depending how things evolve.

        [USD, CHF]
        EUR-CHF has settled in the lower 1.1200s after diving sharply last week to a 10-week low at 1.1212. The rotation lower was a reflection of a broader decline in the Euro, which came amid disappointing Eurozone data (especially the preliminary March PMI survey readings) and a sharp drop in Bund yields, which saw the 10-year benchmark yield go negative for the first time since 2016. The cross has been seeing choppy directional impulses since the start of the year, often times characterized by bouts of pronounced underperformance in the Swiss franc that have often been accompanied by talk/suspicions of SNB intervention.

        [USD, CAD]
        USD-CAD has settled moderately lower after peaking at a two-week high at 1.3444 yesterday. Friday's 2.5%-plus rout in oil prices coupled with a miss in Canadian retail sales data had sparked selling of Canadian Dollars. The broader risk-off theme in global markets has also been weighing on Canadian currency, along with its Dollar bloc brethren. USD-CAD has support at 1.3358-60.

        XE Currency Blog

        Topics6131 Posts6176
        By XE Market Analysis March 25, 2019 2:46 pm
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          XE Market Analysis Posts: 4185
          XE Market Analysis: Asia - Mar 25, 2019

          The Dollar was rangebound in N.Y. on Monday, with the DXY inside a narrow 96.63 to 96.41 trading band. There was little in the way of data to drive the market, and following last week's volatility, a period of consolidation may set in. EUR-USD was stuck inside of 1.1304 and 1.1331, while USD-JPY fell under 109.80 late in the session, after peaking at 110.13 early. Stock market losses weighed on that pairing. USD-CAD topped at 1.3444, later falling to 1.3400 lows as oil prices recovered above $59.00. Cable was heavy on ongoing Brexit uncertainty, falling to 1.3176 after the London close.

          [EUR, USD]
          EUR-USD remained above the 1.1300 mark through the N.Y. session, after rallying in London morning time following better Germany Ifo figures, and an uptick in Bund yields. The pairing spent the day on either side of its 20-day moving average, currently at 1.1322, in a trading band of 1.1304 to 1.1331. Given the relative outperformance of the U.S. economy over the Eurozone, we look for sell-the-rally mindset to prevail for EUR-USD.

          [USD, JPY]
          USD-JPY attempted to rally following a positive Wall Street open, topping at 110.13, up from opening lows of 110.00. Since then, stocks rolled over into the red, resulting in the risk-sensitive pairing testing under the 110.00 mark again. The theme of global slowing and lower Treasury yields that has been building of late, can be expected to keep a lid on USD-JPY going forward. The 50-day moving average at 110.42 now provides resistance, with support at the February 7 low of 109.60.

          [GBP, USD]
          Cable printed a three-session high at 1.3246 before falling to 1.3165 after the London close. The Brexit news flow remained thick. Notable developments include: UK Prime Minister May has still not confirmed that a third vote on her Withdrawal Agreement will take place, suggesting she remains uncertain whether there is enough support for it; the EU has stated that it is "increasingly likely that the UK will leave without a deal on April 12"; and a cabinet member, cited by the Spectator magazine, said that May is "for the first time" -- and "definitely" -- moving towards ruling out a no-deal Brexit eventuality. The EU last week agreed to extend the Brexit deadline to April 12, by which time the UK needs to have approved May's deal or come up with an acceptable alternative plan.

          [USD, CHF]
          EUR-CHF has settled in the lower 1.1200s after diving sharply last week to a 10-week low at 1.1212. The rotation lower was a reflection of a broader decline in the Euro, which came amid disappointing Eurozone data (especially the preliminary March PMI survey readings) and a sharp drop in Bund yields, which saw the 10-year benchmark yield go negative for the first time since 2016. The cross has been seeing choppy directional impulses since the start of the year, often times characterized by bouts of pronounced underperformance in the Swiss franc that have often been accompanied by talk/suspicions of SNB intervention.

          [USD, CAD]
          USD-CAD printed two-week highs of 1.3440 in Asia overnight, later falling back under 1.3405, before rallying to 1.3436 highs into the North American open. Soft Canada retail sales seen last week, along with general risk-off conditions have weighed on the Loonie of late, as have oil prices, with WTI crude trading abut $1.50/bbl under last week's trend high. USD-CAD resistance is now at 1.3467, the March 7 tops, with support at 1.3332, the 20-day moving average.

          XE Currency Blog

          Topics6131 Posts6176
          By xemarketanalysis March 25, 2019 10:05 am
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            xemarketanalysis Posts: 627
            XE Market Analysis: US Treasury Yield Curve Revives Fear of Global Economic Slowdown

            OVERVIEW

            • The Dollar Index is in negative territory, down 0.15% as we move into the final week of Q1

            • EUR/USD trading higher on the back of a better IFO reading

            • NYMEX WTI turns south, down 0.25% and Gold is attracting safe-haven flows.

            HIGHLIGHT

            The Canadian dollar returns above the 1.34 handle after recent soft data. Retail sales number was disappointing, and with an inversion in the yield curve, investors are showing concerns about growth. The GDP number due this Friday will be at the centre stage. USD/CAD is expected to trade higher with an eye on the 1.35 post, as a recent rally in the WTI begins to fade away.

            US DOLLAR

            The inversion of the US Treasury yield curve is the most compelling talk of the town today. The fear of an imminent recession is driving global equity markets lower. The Nikkei ended the session down 3.01%, European indices are in the red and US futures markets are pointing to a similar scenario.  The US dollar is trading with a soft tone against the major currencies: The EUR is higher after better than expected IFO reading. The economic calendar is very light today and the market will be vulnerable noises. We will also hear a series of Fed speakers this week after last FOMC meeting delivered a rather dovish hold. WTI is trading near $58.80, 0.3% lower as the market assess the real concerns of stalling global growth. Gold is up 0.4% and safe haven assets will attract the flow of safe-haven funds. 

            BRITISH POUND

            In the UK, the Brexit drama continues to weigh on the Sterling. The market now waits to see if there will be a third Meaningful vote this week, on a “new” Withdrawal Plan. Last week, the EC agreed to extend Article 50 until May 22nd, assuming the exit plan is approved by the MPs. In case of a new disagreement, they have till April 12th to “indicate a way forward”. So Members of Parliament rejected everything thrown at them without proposing a concrete solution. The sterling remains very volatile.

            EURO

            Finally, we have some relatively good news out of the Eurozone. Though this is hardly tier 1 data, IFO Business Climate rose for the first time after recording six consecutive declines. The market is now hoping that the German economy will recover strength, as with companies starting to become more optimistic for coming months. The consumer confidence index improved from 98.7 to 99.6 points, enough to strengthen the euro against the greenback. EUR/USD closed a rough week 1.54% lower.

            CANADIAN DOLLAR

            The Canadian dollar is weak against the major currencies on the first session of the week. USD/CAD moved back above the 1.34 handle after reports showed Canadian retail sales sank for the third month in a row. Investors will be closely watching for GDP due this Friday for a major market move. We expect the pair to trade along global market sentiment today.

            AUSTRALIAN DOLLAR

            The NZD direction will be dictated by Wednesday’s RBNZ MPS ahead of Thursday’s business confidence data release and RBNZ Gov Adrian Orr’s speech on the future of New Zealand’s monetary policy framework due for release on Friday morning.

            FEATURED CURRENCY

            XE Currency Blog

            Topics6131 Posts6176
            By XE Market Analysis March 25, 2019 7:45 am
              XE Market Analysis's picture
              XE Market Analysis Posts: 4185
              XE Market Analysis: North America - Mar 25, 2019

              EUR-USD is moderately higher on the day, with above-forecast German Ifo survey data and a rise in Bund yields providing the euro with some buoyancy. EUR-USD has posted an intraday high at 1.1324, which is above 30 pips up on Friday's closing levels. This put in some distance from the two-week low that was seen on Friday at 1.1273, itself the culmination of a sharp two-day fall from a six-week high that was seen last Wednesday at 1.1448. USD-JPY recovered above 110.0 has sentiment improved during the Europe AM session. The pair had during the Tokyo session printed a six-week low at 109.70 amid a backdrop of sharp equity market losses across bourses in Asia. AUD-JPY also posted a six-week low. Sterling came under modest pressure, with Cable pegging an intraday low at 1.3167. On the Brexit front, there has been speculation over the weekend that up to 11 of Prime Minister May's cabinet have threatened to resign unless she steps down, although some senior ministers have denied this amid other speculation that she could be making a deal to quit in return for supporting her EU Withdrawal Agreement. The agreement it set to be voted on for a third time, although there has been no confirmation as yet, and probably wouldn't go ahead unless May sees she has sufficient support for it. Parliament will also have a chance this week to form a consensus on alternative Brexit plans, potentially taking control from the government (unprecedented in modern times) on Brexit. If Parliament were to succeed, this would likely mean a soft version of Brexit and quite possibly subject to a ratifying referendum. This scenario would also entail a lengthly delay before the UK left the EU.

              [EUR, USD]
              EUR-USD is moderately higher on the day, with above-forecast German Ifo survey data and a rise in Bund yields providing the euro with some buoyancy. EUR-USD has posted an intraday high at 1.1324, which is above 30 pips up on Friday's closing levels. This put in some distance from the two-week low that was seen on Friday at 1.1273, itself the culmination of a sharp two-day fall from a six-week high that was seen last Wednesday at 1.1448. The high, in turn, had been the product of the Fed's reaffirmed dovish-leaning policy stance, and the following correction came as Bund yields went negative for the first time since 2016 following underwhelming preliminary March PMI outcomes for the Eurozone. Also in the mix of sentiment drivers were above-forecast jobless claims and Philly Fed index data outcomes in the U.S. EUR-USD has remained below the midway level of the 1.1177-1.1570 range that's been seen since the start of the year. We expect the directional bias will remain to the downside, with incoming U.S. data to show relative robustness of the economy, despite last week's brief inversion of the 3-month versus 10-year yield spread (which many see as a harbinger of recession). EUR-USD has resistance at 1.1343-45.

              [USD, JPY]
              USD-JPY recovered above 110.0 has sentiment improved during the Europe AM session. The pair had during the Tokyo session printed a six-week low at 109.70 amid a backdrop of sharp equity market losses across bourses in Asia. AUD-JPY also posted a six-week low. USD-JPY has resistance at 111.05-07, and support at 110.25-30.

              [GBP, USD]
              Sterling has come nuder modest pressure, with Cable pegging an intraday low at 1.3167. On the Brexit front, there has been speculation over the weekend that up to 11 of Prime Minister May's cabinet have threatened to resign unless she steps down, although some senior ministers have denied this amid other speculation that she could be making a deal to quit in return for supporting her EU Withdrawal Agreement. The agreement it set to be voted on for a third time, although there has been no confirmation as yet, and probably wouldn't go ahead unless May sees she has sufficient support for it. Parliament will also have a chance this week to form a consensus on alternative Brexit plans, potentially taking control from the government (unprecedented in modern times) on Brexit. If Parliament were to succeed, this would likely mean a soft version of Brexit and quite possibly subject to a ratifying referendum. This scenario would also entail a lengthly delay before the UK left the EU.

              [USD, CHF]
              EUR-CHF has settled in the lower 1.1200s after diving sharply last week to a 10-week low at 1.1212. The rotation lower was a reflection of a broader decline in the Euro, which came amid disappointing Eurozone data (especially the preliminary March PMI survey readings) and a sharp drop in Bund yields, which saw the 10-year benchmark yield go negative for the first time since 2016. The cross has been seeing choppy directional impulses since the start of the year, often times characterized by bouts of pronounced underperformance in the Swiss franc that have often been accompanied by talk/suspicions of SNB intervention.

              [USD, CAD]
              USD-CAD rallied to a two-week high at 1.3439. Friday's 2.5%-plus rout in oil prices coupled with a miss in Canadian retail sales data had sparked selling of Canadian Dollars. The broader risk-off theme in global markets has also been weighing on Canadian currency, along with its Dollar bloc brethren. USD-CAD has support at 1.3358-60.

              XE Currency Blog

              Topics6131 Posts6176
              By XE Market Analysis March 25, 2019 4:45 am
                XE Market Analysis's picture
                XE Market Analysis Posts: 4185
                XE Market Analysis: Europe - Mar 25, 2019

                USD-JPY printed a six-week low at 109.70, ratcheting up a week-on-week decline of 1.3%. Sharp equity market losses across bourses in Asia have maintained demand for safe havens, including the Japanese currency. AUD-JPY also posted a six-week low, while EUR-JPY remain heavy, although has so far remained above the two-month low the cross saw late on Friday. The dollar bloc currencies came under some pressure; AUD-USD posted a six-day low at 0.7065 while USD-CAD scaled to a two-week high. EUR-USD, meanwhile, has remained relatively steady, tightly orbiting the 1.1300 level. Sterling has come nuder modest pressure, with Cable pegging an intraday low at 1.3167. On the Brexit front, there has been speculation over the weekend that up to 11 of Prime Minister May's cabinet have threatened to resign unless she steps down, although some senior ministers have denied this amid other speculation that she could be making a deal to quit in return for supporting her EU Withdrawal Agreement. The agreement it set to be voted on for a third time, although there has been no confirmation as yet, and probably wouldn't go ahead unless May sees she has sufficient support for it. Parliament will also have a chance this week to form a consensus on alternative Brexit plans, potentially taking control from the government (unprecedented in modern times) on Brexit. If Parliament were to succeed, this would likely mean a soft version of Brexit and quite possibly subject to a ratifying referendum. This scenario would also entail a lengthly delay before the UK left the EU.

                [EUR, USD]
                EUR-USD has settled to a tight orbit of the 1.1300 level, consolidating after tumbling over the two previous sessions to a two-week low at 1.1273. The pair dropped sharply from a six-week high that was seen last Wednesday at 1.1448. The high was seen after the Fed reaffirmed a dovish-leaning policy stance, while the following correction came as Bund yields tumbled, going negative for the first time since 2016, while preliminary March PMI outcomes for the Eurozone disappointed. Also in the mix of sentiment drivers were above-forecast jobless claims and Philly Fed index data outcomes in the U.S. EUR-USD has retreated back below the midway level of the 1.1177-1.1570 range that's been seen since the start of the year. We expect the directional bias will remain to the downside. Support comes in at 1.1263-65.

                [USD, JPY]
                USD-JPY printed a six-week low at 109.70, ratcheting up a week-on-week decline of 1.3%. Sharp equity market losses across bourses in Asia have maintained demand for safe havens, including the Japanese currency. AUD-JPY also posted a six-week low, while EUR-JPY remain heavy, although has so far remained above the two-month low the cross saw late on Friday. USD-JPY has resistance at 111a.05-07, and support at 110.25-30.

                [GBP, USD]
                Sterling has come nuder modest pressure, with Cable pegging an intraday low at 1.3167. On the Brexit front, there has been speculation over the weekend that up to 11 of Prime Minister May's cabinet have threatened to resign unless she steps down, although some senior ministers have denied this amid other speculation that she could be making a deal to quit in return for supporting her EU Withdrawal Agreement. The agreement it set to be voted on for a third time, although there has been no confirmation as yet, and probably wouldn't go ahead unless May sees she has sufficient support for it. Parliament will also have a chance this week to form a consensus on alternative Brexit plans, potentially taking control from the government (unprecedented in modern times) on Brexit. If Parliament were to succeed, this would likely mean a soft version of Brexit and quite possibly subject to a ratifying referendum. This scenario would also entail a lengthly delay before the UK left the EU.

                [USD, CHF]
                EUR-CHF has settled in the lower 1.1200s after diving sharply last week to a 10-week low at 1.1212. The rotation lower was a reflection of a broader decline in the Euro, which came amid disappointing Eurozone data (especially the preliminary March PMI survey readings) and a sharp drop in Bund yields, which saw the 10-year benchmark yield go negative for the first time since 2016. The cross has been seeing choppy directional impulses since the start of the year, often times characterized by bouts of pronounced underperformance in the Swiss franc that have often been accompanied by talk/suspicions of SNB intervention.

                [USD, CAD]
                USD-CAD rallied to a two-week high at 1.3439. Friday's 2.5%-plus rout in oil prices coupled with a miss in Canadian retail sales data had sparked selling of Canadian Dollars. The broader risk-off theme in global markets has also been weighing on Canadian currency, along with its Dollar bloc brethren. USD-CAD has support at 1.3358-60.

                XE Currency Blog

                Topics6131 Posts6176
                By XE Market Analysis March 22, 2019 2:42 pm
                  XE Market Analysis's picture
                  XE Market Analysis Posts: 4185
                  XE Market Analysis: Asia - Mar 22, 2019

                  The Dollar index largely maintained altitude through the N.Y. session, after spiking higher in Europe following weak EU PMIs, and negative Bund yields, which weighed heavily on EUR-USD. The DXY peaked at six-session highs of 96.81, before meandering between 96.54 and 96.78 through the N.Y. session. EUR-USD touched 1.1274 lows. USD-JPY slid to better than one-month lows of 109.75, reacting to the sharply negative risk backdrop. USD-CAD topped at 1.3426 following weak Canada retail sales and in-line CPI outcomes. Cable topped at 1.3220.

                  [EUR, USD]
                  EUR-USD fell to near two-week lows of 1.1274, slicing through its 50- and 20-day moving averages at 1.1350 and 1.1323, respectively, during the European morning session following weak PMI data. Stronger U.S. housing data helped the Greenback in N.Y. hours, though the risk-off backdrop driven by global growth fears has generally supported the USD (aside from risk-sensitive USD-JPY) since then.

                  [USD, JPY]
                  USD-JPY has given up the 110 handle, dropping to over one-month lows of 109.75 in N.Y. trade. The risk-sensitive pairing has reacted to the sharp Wall Street sell-off today, prompted by fears of global economic slowing, and a slide in U.S. Treasury yields. Support is now at 109.74, the February 11 low, with resistance up at 110.38, representing the 50-day moving average.

                  [GBP, USD]
                  Cable rallied over 1.3220 in N.Y. trade, after recovering from yesterday's 1.3004 low. Prime Minister May is reportedly looking to hold a third vote on her EU Withdrawal Agreement next Tuesday, although it remains unclear if the Speaker of the House of Commons will allow it having ruled that it must be substantially different for it to be voted on again. What is clear is that the EU will not give a last-minute concession on the Irish backstop. If the PM's deal is passed, the UK would have until to May 22 to get the necessary withdrawal legislation done before exiting the EU. At the same time, the Brexit extension will buy time for Parliament to try and take control of the Brexit process. If Parliament succeeded, it would attempt to form a cross-party consensus on a "soft" version of Brexit, which would likely see EU reopen negotiations and possibly pave the way to a longer delay in Brexit.

                  [USD, CHF]
                  EUR-CF continued its slide, dropping to two-month lows of 1.1212 as the Euro continued to weaken following weak EU PMIs and negative Bund rates. Softening of European incoming data, and the likelihood the ECB will be on hold for the foreseeable future, means the SNB has no where to go now either.

                  [USD, CAD]
                  USD-CAD rallied to two-week highs of 1.3426 from near 1.3400 following the Canada retail sales and CPI outcomes, where the former missed expectations, and the latter was close to forecasts. Domestic USD-CAD buying was rumored earlier from the North American open. The next upside target comes at 1.3440, which was the March 11 high. Elsewhere, WTI crude prices continue to fade lower on global growth concerns, also supportive of USD-CAD.

                  XE Currency Blog

                  Topics6131 Posts6176
                  By xemarketanalysis March 22, 2019 10:43 am
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                    xemarketanalysis Posts: 627
                    XE Market Analysis: The US Dollar Shrugs off a Dovish Fed

                    OVERVIEW

                    • The Dollar Index touches a seven-day high after the Eurozone stumbles on poor PMIs
                    • The stalling economy sent the euro in negative territory, down 0.6% against the USD
                    • NYMEX WTI steadies after catching new 2019 high near $60.40.

                    HIGHLIGHT

                    The euro is under heavy selling pressure this morning after PMI data revealed that economic growth is stalling. Private sector business activity slowed down significantly in France, and the Manufacturing Output Index is at a 3-month low. Ongoing protests are also not helping to inject confidence among the business community. Germany is experiencing a similar slowdown. The Flash PMI plunged to a 69-month low, and softer global demand weighed on the performance of the manufacturing sector which is now at its weakest contraction rate since 2012.

                    US DOLLAR

                    The US dollar extends its recovery against the major peers with the DXY Index now hovering near an eight-day high. There are strong buying interests following weaker than expected PMI numbers out of the Eurozone. Improving manufacturing conditions as revealed by the Philly Fed Index yesterday also helped to shrug off dovish comments from the Fed.

                    The gauge for manufacturing activity jumped from a reading of minus 4.1 last month to 13.7 in March. Commodity currencies are trading with a negative bias mirroring soft performance from the oil futures market. WTI is 1.2% down, on profit-taking activities. Crude is retracing after touching a fresh high at $60.40 a barrel. After a busy week, the economic calendar is quite light this Friday. We only have the manufacturing PMI and home sales data coming up today. 

                    BRITISH POUND

                    GBP/USD is trading in a positive territory today after dropping 1.70% yesterday. The EU agreed to postpone Brexit for two weeks, to April 12th.  We are, however, doubtful that the Parliament will be able to agree on the same deal that was rejected twice unless of course, the MPs concoct a last minute deal. The PM is hoping to be able to tweak the Withdrawal Plan, failing which a no-deal exit could very well become a reality. The pound is expected to remain volatile as investors look forward to another week of uncertainty due to unfold in the House of Commons.

                    EURO

                    The euro is the weakest performer among the G-10 currencies this morning. EUR/USD plunged 0.6% form the session high after Eurozone PMIS was below market expectations. French business activity contracted, falling below the critical 50 handle to a two-month low at 48.7. New orders declined, and new export recorded its steepest drop in nearly three years.

                    Meanwhile, the German manufacturing downturn continues. PMI was t 44.7, a six-year low. The economy continues to be affected by growing uncertainty over Brexit and US-China trade relations. EUR/USD is now trading at its lowest level in seven days, erasing all post-FOMC gains.

                    CANADIAN DOLLAR

                    The Canadian dollar dropped to its lowest level in a week after retail sales decline for the third consecutive month in January. CPI rose 1.5% on a year-over-year basis last month. With the WTI trading lower today and a resurgent greenback, we expect the loonie to trade with a negative bias.

                    AUSTRALIAN DOLLAR

                    This week's announcement of the February Australian unemployment rate of 4.9%, which is the lowest level it has hit since 2011. ANZ analysts are sceptical that the country can maintain this level, and are concerned about stagnant wages, high levels of household debt, and falling house prices are dampening the good jobs news. AUD USD currently sits at 0.71006 after hitting a high of 0.71285

                    FEATURED CURRENCY

                    XE Currency Blog

                    Topics6131 Posts6176
                    By XE Market Analysis March 22, 2019 7:12 am
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                      XE Market Analysis Posts: 4185
                      XE Market Analysis: North America - Mar 22, 2019

                      The Dollar traded mixed, gaining sharply agains the Euro following underwhelming PMI data out of the Eurozone, while concurrently losing ground to the Pound, which traded firmer after the EU granted a delay in Brexit. The U.S. currency, meanwhile, also posted gains against the Dollar bloc currencies, which have come under pressure concomitantly with flagging global stock markets and commodity prices, while at the same time losing ground to the Yen, which picked up a degree of safe haven demand. The biggest mover out of the main currencies we keep tabs on is EUR-GBP, which was showing a net decline of 0.8% heading into the New York interbank open. EUR-USD was off by 0.5%, at 1.1307 bid, earlier printing a nine-day low at 1.1288, which was the culmination of a one-big-figure drop, extending the correction from the six-week high that was seen on Wednesday at 1.1448. The Eurozone composite PMI came in at 51.3 in the flash estimate for March, off the median forecast for 52.0 and declining from 51.9 in February. Added to anecdotal evidence of prevailing Brexit-related disruption, a bleaker picture of the Eurozone has taken view. The 10-year Bund yield was down another 3.6 bp, building on yesterday's 4 bp decline. Cable has settled near 1.3150 after recovering from yesterday's 1.3004 low. USD-JPY ebbed back under 110.50 after closing yesterday near 110.80, but had remained above yesterday's six-week low at 110.30. Euro underperformance drove EUR-JPY into 11-day low terrain. Japan's nationwide core CPI undershot expectations at 0.7% y/y in February.

                      [EUR, USD]
                      EUR-USD has dropped for a second straight day, with today's selling catalyst being sub-forecast preliminary PMI outcomes for the Eurozone. The pair pegged a low at 1.1288 after diving by one big figure before finding a toehold. This extends the sharp drop from the six-week high that was seen on Wednesday at 1.1448. The Eurozone composite PMI came in at 51.3 in the flash estimate for March, off the median forecast for 52.0 and declining from 51.9 in February. Added to anecdotal evidence of prevailing Brexit-related disruption, a bleaker picture has taken view. The 10-year Bund yield is down another 3.6 bp, building on yesterday's 4 bp decline, hitting a 29-month low at 0.002%. Also in the mix of sentiment drivers were yesterday's above-forecast jobless claims and Philly Fed index data outcomes, which helped offset the Fed's reaffirmation of its dovish turn this week. EUR-USD has now retreated back below the midway level of the 1.1177-1.1570 range that's been seen since the start of the year. Support comes in at 1.1263-65. The pair would need to close out today below 1.1324-25 to make this a down week.

                      [USD, JPY]
                      The yen has been trading neutrally so far today. USD-JPY ebbed back under 110.50 but pre-week markets lacked the muster for a challenge on yesterday's six-week low at 110.30. EUR-JPY dove into 11-day terrain, driven by broader Euro selling following underwhelming preliminary March PMI data out of the Eurozone. Japan's nationwide core CPI undershot expectations at 0.7% y/y in February. The median forecast had been for 0.8% y/y. The data will maintain pressure on the BoJ to persist with ultra accommodative monetary policy, in the seemingly forlorn endeavour to reach its 2% target. The data cast little impact on the yen, although still undermined bearish arguments for USD-JPY following benign inflation data in the U.S. and the Fed's reaffirmed dovish turn. The 10-year JGB yield hit -0.050%, its lowest since November 2016. In equity markets, the MSCI Asia-Pacific (ex-Japan) index hit a fresh six-and-a-half-year high in early trade before retreating. Most indices in Asia are presently nursing moderate declines. Japan's Nikkei 225 closed flat, while China's CSI 300 finished with a fractional 0.1% loss. USD-JPY has resistance at 111.05-07, and support at 110.25-30.

                      [GBP, USD]
                      The Pound has traded firmer in the wake of the EU granting an extension in the Brexit process. A two-week delay has been stimulated for UK Prime Minister May to get her deal through Parliament or come up with another plan. If the PM's deal is passed, then the UK would have until to May 22 to get the necessary withdrawal legislation done before exiting the EU. Things remain fluid, though one thing is certain is that March 29 has ceased to be Brexit day. A third vote on May's deal, if it happens, would be hard to call. The EU is not likely to make the concessions on the Irish backstop which the DUP and at least 20 of the hardline Brexiteers in the Tory party demand, but faced with the likelihood of Parliament taking control of the Brexit process, they conceivably could be persuaded. The Brexit extension will also buy time for Parliament -- which is by significant majority staunchly against a no-deal scenario -- to wrest control of the Brexit process, which would all by wipe out the risk for a no-deal scenario. There is already a motion that would allow this tabled for Monday. Cable has settled near 1.3150 after recovering from yesterday's 1.3004 low.

                      [USD, CHF]
                      EUR-CHF dove sharply yesterday to a two-month low at 1.1266, subsequently steadying in the upper 1.1200s. The Euro came under pressure as the 10-year Bund yield hit 28-month lows. The cross has been seeing choppy directional impulses since the start of the year, often times characterized by bouts of pronounced underperformance in the Swiss franc that have often been accompanied by talk/suspicions of SNB intervention.

                      [USD, CAD]
                      USD-CAD rebounded from recent losses, tracking a broader price action in the U.S. Dollar. Above forecast data out of the U.S., including the latest readings on jobless claims and Philly Fed index, propped up Treasury yields. At the same time oil prices pulled back from fresh trend highs. USD-CAD saw a rebound high at 1.3400 before the pair settled back near 1.3350. Canadian February CPI data will be released today. We expect a 1.4% y/y headline, which would match the January rate. The core measures are expected to hold just under a 2.0% y/y clip in February, consistent with a subdued backdrop for underlying inflation. Retail sales, also up today, has us anticipating growth of 0.3% in January after the 0.1% dip in December. Data in line with expectations should't have much impact on the Canadian Dollar. USD-CAD resistance at 1.3358-60.

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