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By XE Market Analysis September 16, 2019 4:13 am
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    XE Market Analysis Posts: 4539
    XE Market Analysis: Europe - Sep 16, 2019

    A stab of risk-off positioning drove the Yen higher in early trade, although follow-through has been limited. News that a drone attack on Saudi oil facilities have shut down 5% of global supply impacted at the open of trading. Some solace was taken on the view that the Saudi will be able to maintain exports for a time by tapping into crude stockpiles while work commences in restoring production, although oil prices, while down from the highs, are still showing a near 10% gain on the day, and there are concerns that U.S.-Iranian tensions could ratchet up given the suspicions of the former about the possible involvement of the latter. Data out of China were also worrisome, showing industrial production falling growth to a 17-and-a-half year low rate of 4.4% y/y in August, down from 4.8% y/y in the month prior and the lowest rate since February 2002. The median forecast had been for an increase to 5.2%. Retail sales and investment data out of China also saw weakness. USD-JPY printed a six-day low at 107.48 before settling in the upper 107.00s after some early chop. Yen crosses saw a similar price action. Most developing-nation currencies weakened, as did the Australian and New Zealand Dollars, though the Canadian Dollar lifted due to the rise in oil prices, being a positive for Canada's terms of trade. Market participants will be looking for how long will crude supply will be affected by the damaged facilities in Saudi Arabia and what the incident means on the geopolitical front. The Fed is also set to execute a second rate cut this Wednesday. Just a 25 bp is expected now, rather than a 50 bp move, given the recent cooling in U.S.-China trade tensions.

    [EUR, USD]
    EUR-USD has started the new week without directional flare, so far holding in a narrow range below the three-week high seen last week at 1.1109. The pair is fractionally up on week-ago levels and is near net unchanged from month-ago levels, and holding a near 3.5% loss on the year-to-date. Last week's ECB promise of open-ended asset purchase, which initially drove the Euro to a 1.0926 low, evidently wasn't sufficient to sustain declines with the Fed on track to cut rates a second time next Wednesday, even though aggressive action isn't likely considering the strength in the U.S. economy and with the U.S.-China relations on trade having improved. Overall, EUR-USD looks likely to maintain a non-directional bias.

    [USD, JPY]
    The Yen briefly rose in early trading amid a bout of risk-off positioning,lthough follow-through has been limited. News that a drone attack on Saudi oil facilities have shut down 5% of global supply impacted at the open of trading. Some solace was taken on the view that the Saudi will be able to maintain exports for a time by tapping into crude stockpiles while work commences in restoring production, although oil prices, while down from the highs, are still showing a near 10% gain on the day, and there are concerns that U.S.-Iranian tensions are ratcheting up given the accusations of the former about that the latter was involved. Data out of China were also worrisome, showing industrial production falling growth to a 17-and-a-half year low rate of 4.4% y/y in August, down from 4.8% y/y in the month prior and the lowest rate since February 2002. The median forecast had been for an increase to 5.2%. Retail sales and investment data out of China also saw weakness. USD-JPY printed a six-day low at 107.48 before settling in the upper 107.00s after some early chop. Yen crosses saw a similar price action. After three consecutive gains, USD-JPY could now be in for a down leg, especially if the Mideast geopolitical situation flares up.

    [GBP, USD]
    The Pound has come under moderate pressure today, correcting some after rallying over the last several weeks with the UK Parliament now having outlawed a no-deal Brexit on October 31. A Halloween Brexit with a deal is still possible, but looking unlikely at this stage, with a further pushing back of the Brexit deadline, to January 31 next year, looking more likely. A general election is coming, which will be the final battle in the UK's civil warring on Brexit. Sterling, while up over 4% from the early-September major-trend low versus the Dollar, isn't likely to see further sustained gains, with markets still likely to demand a Brexit discount as the possibility of a no-deal exit still remains, depending on who triumphs at the election (a coalition government formed by the Conservative and Brexit parties, which is a possibility even if it doesn't as yet look like a probability, would lead to a no-deal exit from the UK becoming a reality).

    [USD, CHF]
    EUR-CHF has remained buoyant after printing a six-week high last Tuesday at 1.0968, which extended the rebound from the 26-month low at 1.0811. The pickup in risk appetite in global markets, and reduced risk for a no-deal Brexit, has fostered an unwinding in the Franc's safe haven premium (such as it is given the punishing -0.75% deposit rate in Switzerland).

    [USD, CAD]
    USD-CAD took a short sharp dip to a 1.3210 low before recouping back above 1.3250. News of the drone attack on Saudi oil facilities was taken as buying cue by markets in early Asia, though the trade ran out of steam as markets factor in the ability for the Kingdom to tap into stockpiled reserves to maintain exports for a period while work commences on restoring damaged facilities. USD-CAD has resistance at 1.3287-90.

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    Topics6593 Posts6638
    By xemarketanalysis September 13, 2019 12:01 pm
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      XE Market Analysis: The GBP Doesn't Suffer from Paraskevidekatriaphobia

      OVERVIEW

      • Despite the drama from the dweller of 10 Downing Street, the pound hit a 2-month high against the US Dollar. 
      • Currency market watchers are treading cautiously ahead of next week's FOMC meeting
      • The market was looking for a more generous stimulus package for the EU than the ECB delivered. 

      HIGHLIGHT

      Sterling is showing no sign of paraskevidekatriaphobia (the fear of Friday the 13th) jumping to a two-month high against the greenback. Market participants continue to bet heavily, and perhaps dangerously, on an outcome of the UK exiting the EU with a makeshift agreement (after another extension) rather than a no-deal Brexit. 

      13 September 2018 GBP USD Close 1.24531

      US DOLLAR

      The Dollar Index, down 0.25%, looks to be heading for its second successive weekly decline. U.S. retail sales rose 0.4% in August following July’s of 0.8%, according to the latest data from the U.S. Commerce Department, released Friday; the data was better than as economists were expecting to see an increase of 0.2%. Crude oil prices have steadied in the futures market after slumping nearly 4% yesterday. We should expect some relief for under-pressure commodity-linked currencies. Gold has moved above $1,500 an ounce, up 0.6% this morning. The market is likely to move into cautious mode ahead of the scheduled mid-week FOMC meeting.

      BRITISH POUND

      Sterling rose above the 1.2450 barrier, a two-month high, carried by renewed optimism that a no-deal Brexit can be avoided altogether. A new extension of exit date is on the cards. And so is a fresh general election in the UK. Whilst the recent rally has been purely based on speculation, we remain cautious around the fundamental developments surrounding Brexit and expect the 1.25 to hold unless a real breakthrough is achieved when the PM meets with EU officials.

      EURO

      The ECB came, it saw, but it failed to deliver the right stimulus package to meet the market’s expectations. The Euro saw an initial drop to nearly a 15-month low before staging a strong rally to the 1.11 mark. The central bank announced it would restart a timid €20 billion asset purchase program as of 1 November and has cut the deposit rate by 10 bp to minus 50 bp. Yet, the latest action from the Governing Council once again proves that monetary policies alone cannot kickstart a sustainable economic growth. Yet as you know, it takes two to tango. The market will now be looking for fiscal measures from members nations, especially from Germany to revive its flagging economy.

      CANADIAN DOLLAR

      USD/CAD is trading within a tight 30 pips range in a directionless market. With no local data on the slate, the loonie is been driven mostly by exogenous factors. The ongoing election campaign is unlikely to have any major impact on the currency pair. The country goes to the polls on October 21st. The loonie is benefiting from a steady performance in crude oil this morning. WTI is currently trading around $55.00 a barrel, after declining $2 yesterday. OPEC+ may be called to revisit its output production cut to re-balance the market.

      AUSTRALIAN DOLLAR

      The Australian dollar made modest gains this week on the USD and is hovering around 0.68990.

      FEATURED CURRENCY

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      Topics6593 Posts6638
      By XE Market Analysis September 13, 2019 7:39 am
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        XE Market Analysis: North America - Sep 13, 2019

        A 1%-plus rally in the Pound has been the main dynamic among the main currencies, which spirited Cable to a seven-week peak at 1.2476, extending the rebound from last week's major-trend low at 1.1958. There was no particular catalyst. While EU Trade Commissioner Hogan said that events in the UK's Parliament have improved the odds for an extension in the Brexit deadline, this didn't tell us anything we didn't already know, while Sterling had been driving higher well before his remarks hit the wires. The UK currency's ascent is more a case of market participants taking stock of the sharp descaling in the risk for a no-deal Brexit, which has now been outlawed on October 31. No-deal still can't be ruled out, though not before the Brexit deadline is pushed out to the end of January, which at the moment is looking a strong probability. Elsewhere, EUR-USD lifted on Cable's coattails, rising into 17-day high terrain above 1.1100. The ECB's promise of open-ended asset purchase, which initially drove the Euro to a 1.0926 low, hasn't evidently been sufficient to sustain declines with the Fed on track to cut rates a second time next Wednesday, even though aggressive action isn't likely considering the strength in the U.S. economy. The Yen posted fresh trend lows against the dollar, though remained just off the lows it saw against the Euro, Australian Dollar and other currencies yesterday. USD-JPY printed a six-week high at 108.26 in what is now the fourth consecutive day of higher-high making. The Japanese currency has been underperforming maid a persisting phase of risk-on conditions in global markets.

        [EUR, USD]
        EUR-USD has lifted to 17-day highs above 1.1100, tracking strong gains in Cable during the London morning session. The pair is now up by nearly 1% from week-ago levels, but is down by 0.4% from month-ago levels and is off by over 3% on the year-to-date. The ECB's promise of open-ended asset purchase, which initially drove the Euro to a 1.0926 low, wasn't sufficient, evidently, to sustain declines with the Fed on track to cut rates a second time next Wednesday, even though aggressive action isn't likely considering the strength in the U.S. economy.

        [USD, JPY]
        The Yen posted fresh trend lows against the Dollar, though remained just off the lows it saw against the Euro, Australian Dollar and other currencies yesterday. USD-JPY printed a six-week high at 108.26 in what is now the fourth consecutive day of higher-high making. The Japanese currency has been deflating maid a persisting phase of risk-on conditions in global markets. The ECB's policy bazooka, particularly the promise of open-ended asset purchases, has been the latest fodder for bulls on world stock markets, which comes amid a cooling in U.S.-China trade tensions. Expectations for stimulus of the fiscal kind in Europe and China are also in the mix, offsetting a recent descaling in expectations for stimulus of the monetary kind by the Fed and ECB. The mood music could change quickly. On the U.S.-China trade front, we have, of course, many times heard upbeat rhetoric in the many previous rounds of the so-far fruitless trade discussions. For now, however, the Yen looks likely to remain on a downwardly biased track.

        [GBP, USD]
        The Pound is up strongly, showing a near 1% gain on the day versus both the dollar and yen, and up 0.6% in the case against the euro. Cable has printed a seven-week peak at 1.2455, extending the rebound from last week's major-trend low at 1.1958. The reason? Markets taking stock of the sharp descaling in the risk for a no-deal Brexit, which has now been outlawed on October 31. No-deal still can't be ruled out, though not before the Brexit deadline is pushed out to the end of January, which at the moment is looking a strong probability, and only in the event the Conservative Party wins the upcoming election (likely in late November or early December), especially if the Brexit Party performed strongly and the two form a coalition government. The pro-EU parties, which are strategising electoral pacts and alliances, look likely to be a force to be reckoned with, too.

        [USD, CHF]
        EUR-CHF has remained buoyant after printing a six-week high on Tuesday at 1.0968, which extended the rebound from the 26-month low seen on Tuesday at 1.0811. The pickup in risk appetite in global markets, and reduced risk for a no-deal Brexit, has fostered an unwinding in the Franc's safe haven premium (such as it is given the punishing -0.75% deposit rate in Switzerland).

        [USD, CAD]
        USD-CAD printed a on-week high at 1.3325, extending the rebound from the six-week low on Tuesday, at 1.3134. A sharp drop in oil pries this week, catalysed by the departure of hawkish-on-Iran U.S. national security advisor, John Bolton, has weighed on the Canadian currency relative to its U.S. counterpart. USD-CAD has resistance at 1.3234-35.

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        Topics6593 Posts6638
        By XE Market Analysis September 13, 2019 2:39 am
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          XE Market Analysis: Europe - Sep 13, 2019

          The yen posted fresh trend lows against the dollar, though remained just off the lows it saw against the euro, Australian dollar and other currencies yesterday. USD-JPY printed a six-week high at 108.26 in what is now the fourth consecutive day of higher-high making. The Japanese currency has been deflating maid a persisting phase of risk-on conditions in global markets. The ECB's policy bazooka, particularly the promise of open-ended asset purchases, has been the latest fodder for bulls on world stock markets, which comes amid a cooling in U.S.-China trade tensions. Elsewhere, EUR-USD has settled around the 1.1070 mark after recouping from the post-ECB announcement low at 1.0926.

          [EUR, USD]
          EUR-USD has settled around the 1.1070 mark after recouping from the post-ECB announcement low at 1.0926. The ECB's launched a policy bazooka yesterday. The interest rate on the deposit facility will be decreased by 10 basis points to -0.50% and net purchases will be restarted under the central bank's asset purchase programme (APP) at a monthly pace of €20 billion as from 1 November. The ECB stated that it expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and that net asset purchases will run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates. The promise of open-ended asset purchases was a surprise to markets, although Euro selling failed to sustain. The FOMC is up next week, with the Fed on track to cut rates a second time, although aggressive action isn't likely considering the strength in the U.S. economy. Overall, despite the choppy price action over the last day, we retain a bearish view of EUR-USD.

          [USD, JPY]
          The Yen posted fresh trend lows against the dollar, though remained just off the lows it saw against the euro, Australian dollar and other currencies yesterday. USD-JPY printed a six-week high at 108.26 in what is now the fourth consecutive day of higher-high making. The Japanese currency has been deflating maid a persisting phase of risk-on conditions in global markets. The ECB's policy bazooka, particularly the promise of open-ended asset purchases, has been the latest fodder for bulls on world stock markets, which comes amid a cooling in U.S.-China trade tensions. Expectations for stimulus of the fiscal kind in Europe and China are also in the mix, offsetting a recent descaling in expectations for stimulus of the monetary kind by the Fed and ECB. The mood music could change quickly. On the U.S.-China trade front, we have, of course, many times heard upbeat rhetoric in the many previous rounds of the so-far fruitless trade discussions. For now, however, the Yen looks likely to remain on a downwardly biased track.

          [GBP, USD]
          The Pound continues to trade without domestically-driven direction, which has been the case since Parliament closed on Tuesday. On the Brexit front there are currently political wranglings over the ruling of a Scottish court that Prime Minister Johnston's "proroguing" (shutting down of Parliament for a period) was illegal, with opposition parties demanding that Parliament be reopened and with Johnson insisting that it won't. We suspect that the government will get its way on this one. Meanwhile, with Johnson at risk of failing to deliver his "do or die" pledge to achieve Brexit on October 31, with the option to leave without a deal at that date now outlawed, there is a sense that the normally thick-skinned Boris is feeling the pressure to make a deal with Brussels on what would be a revamped version of the already-on-the-table Withdrawal Agreement. The EU has dangled the option of limiting the Northern Ireland backstop, which would effectively wedge a customs border between Northern Ireland and the rest of the UK. That's the best option for Johnson if he is serious about pulling off a Halloween Brexit. Otherwise he would have to come up with alternative border arrangements that would satisfy the EU's demands of maintaining the integrity of both the single market and the Good Friday Peace Agreement, which looks impossible. Bottom line, there won't likely be sufficient support in Parliament for whatever Johnson comes up with, unless he yields to demands for there being a second, confirmatory referendum, which would be politically risky for him as he heads into an election with the Brexit Party snapping at his heels. The most likely scenario is for the Brexit deadline to be pushed out to January 31, with a general election November or December.

          [USD, CHF]
          EUR-CHF has remained buoyant after printing a six-week high on Tuesday at 1.0968, which extended the rebound from the 26-month low seen on Tuesday at 1.0811. The pickup in risk appetite in global markets, and reduced risk for a no-deal Brexit, has fostered an unwinding in the Franc's safe haven premium (such as it is given the punishing -0.75% deposit rate in Switzerland).

          [USD, CAD]
          USD-CAD printed a on-week high at 1.3325, extending the rebound from the six-week low on Tuesday, at 1.3134. A sharp drop in oil pries this week, catalysed by the departure of hawkish-on-Iran U.S. national security advisor, John Bolton, has weighed on the Canadian currency relative to its U.S. counterpart. USD-CAD has resistance at 1.3234-35.

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          Topics6593 Posts6638
          By XE Market Analysis September 12, 2019 2:38 pm
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            XE Market Analysis: Asia - Sep 12, 2019

            The dollar rallied early in N.Y. on Thursday on the back of a warmer core U.S. CPI outcome, and on an ECB announcement which included a 10 basis point rate cut, and an open-ended reinstatement of QE. This saw EUR-USD fall to within a hair of the two-plus year lows of 1.0926 seen in early September. USD-JPY rallied to 108.11 highs as risk-on conditions remained in place, as Wall Street approached all time highs. USD-CAD traded between 1.3177 to 1.3217, closing near its high, as oil prices remained under pressure. Cable bottomed at 1.2283, later rallying back to 1.2340, and so far holding above its 50-day moving average at 1.2277 through the week.

            [EUR, USD]
            EUR-USD initially rallied to 1.1067 from near 1.1020 following the as-expected ECB rate cut of 10 basis points. The pairing quickly reversed to eight session lows of 1.0927 on the realization that QE will be restarted in November. EGB yields initially turned sharply lower. EUR-USD later headed back above pre-ECB announcement levels, topping at 1.1087, as EGB yields unwound all their earlier losses, supporting the EUR, while expectations for aggressive Fed easing have waned, though a 25 basis point cut at next week's FOMC meeting is fully priced in. EUR-USD support remains at 1.0926, the September 3 two-plus year low, with resistance at the August 29 peak of 1.1093.

            [USD, JPY]
            USD-JPY rallied to fresh one-month highs of 108.16 during the overnight Asian session, later falling into 107.52 lows in early U.S. dealings. Apparent concessions on the trade front by both the U.S. and China, along with accompanying risk-on conditions, have seen the pairing bounce back over the 108.00 level into the London close. The usual talk of Japanese exporter offers over the 108 mark have been heard, though appear to have been filled by now. Renewed optimism on trade progress, should continue to underpin USD-JPY.

            [GBP, USD]
            Cable dipped early on the back of warmer U.S. CPI data, falling to 1.2283 low, and down from opening highs near 1.2340.The pound continues to trade without domestically-driven direction, which has been the case since Parliament closed on Tuesday. On the Brexit front, things remain relatively quiet, with parliament remaining shut, and no new ideas as to how the process plays out. The October 31 Brexit deadline is quickly approaching.

            [USD, CHF]
            EUR-CHF fell from near 1.0950 to 108.52 lows following the ECB announcement, which resulted in a rate cut and the re-implementation of QE. The cross was dragged lower by EUR-USD, which fell to near two-plus year lows. As EUR-USD later recovered, so too did EUR-CHF, peaking at 1.0965.

            [USD, CAD]
            USD-CAD posted one-week highs of 1.3218 in early North American trade, up from Asian lows of 1.3177. Another downdraft in WTI crude prices, plus warmer U.S. CPI kept buyers in charge for a while. The pairing turned choppy later in the session, traversing a 1.3177 to 1.3217 trading band, though was set to close above the 50-day moving average at 1.3198. The September 6 top of 1.3244 the next resistance level.

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            Topics6593 Posts6638
            By xemarketanalysis September 12, 2019 11:24 am
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              XE Market Analysis: The ECB Rolled a Six-Sided Die Hoping for a Seven

              OVERVIEW

              • Inflation is in the spotlight today in the US and Europe after data releases from the US Fed and ECB
              • Operation Yellowhammer documents paint a bleak picture of no-deal Brexit scenarios
              • WTI crude prices down on overly abundant supply

              HIGHLIGHT

              The European Central Bank and US inflation took centre stage in the financial market today. The Governing Council of the ECB delivered a three-pronged attack: reducing the interest rate on the deposit facility by 10 basis points to -0.50%, restarting the asset purchase programme (APP) at a monthly pace of €20 billion as from 1 November and introducing a two-tier system for reserve remuneration. 

               
              The Euro, however, plunged 0.4% on the news as these monetary measures may prove to be not enough of a monetary loosening to prop an ailing Eurozone. 
               
              The currency market remains volatile as participants continue to digest the incoming news. Oil is trading lower 1.50% this morning, as a result of lower demand and a return to a supply glut. Commodity-linked currencies are expected to trade with a downside bias.

              US DOLLAR

              On the other hand, core CPI in the US rose 0.3% in August, beating market estimates. The index now stands at 2.4% over the past 12 months (the largest increase since July 2018), quashing any hope of a further rate cut from the US Fed next week. The market remains volatile as participants continue to digest the incoming news.

              President Trump delayed new tariffs on Chinese products, providing hope that there is progress in the US-China trade negotiations.  

              BRITISH POUND

              GBP/USD dips below key 1.2300s amidst broad-based US dollar strength. The details of Operation Yellowhammer failed to cause lasting concerns to the pound. The market believes the worst-case scenario could be avoided altogether. With less than 50 days to go until (the scheduled) Brexit day of October 31st, all the options are still alive, and a prolonged consolidation of GBP/USD could eventually lead to heightened volatility and breakout.

              EURO

              EUR/USD jumped to 1.1070s on a kneejerk reaction following the ECB’s decision to cut rates. However, there is now a general sense of disappointment as the details of the decision starts to seep into the market. 

               
              The ECB is leaving the door open for further loosening to meet its mandated objective begins on the bond purchases in November but the introduction of a two-tier system for reserve remuneration, exempting some holdings from the negative deposit facility rate is being considered having a negating overall effect. The pair is expected to challenge the lows of 1.0950s.

              CANADIAN DOLLAR

              The Canadian dollar sees its recent rally against the greenback coming to an end after US inflation surprised the market to the upside. USD/CAD is up 0.2% as of this writing. We are seeing downward pressure coming from the oil futures market. WTI is down by nearly 2%, trading $ 54.50 a barrel. OPEC+ sees a risk of supply glut returning to the market as a result of higher shale production and subdued global demand.

              AUSTRALIAN DOLLAR

              Positive signals around US-China trade talks seem to be buoying the Aussie dollar. AUD USD now sits at 0.68760 after hitting a high of 0.68910.GBP EUR 12 September 2019 Close 1.11687

              FEATURED CURRENCY

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              Topics6593 Posts6638
              By XE Market Analysis September 12, 2019 6:07 am
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                XE Market Analysis: North America - Sep 12, 2019

                The Dollar has taken a turn lower, losing ground to commodity currencies amid an enduring risk-on phase in global markets, and with the Euro seeing a pre-ECB upward shift during the London morning session. USD-JPY also corrected after posting a fresh six-week high during the Tokyo session. EUR-USD recouped back above 1.1000 after yesterday printing an eight-day low at 1.0985. The pairing is now back to near net unchanged levels from where it was a week ago. The focus is on the upcoming ECB policy announcement, which is widely expected to bring further easing measures. We are expecting a small 10 bp cut in the deposit rate to -0.50%, with a tiered system to limit the impact of negative rates. There is some scope for market-moving impact. The event risk has been that the package of measures will fall short of what markets had until recently been pricing in, though there has over the last week been some down-adjusting in stimulus expectations. Elsewhere, USD-JPY printed a fresh six-week high at 108.16 ahead of the London interbank open before settling back under 108.0. AUD-JPY and GBP-JPY also posted new six-week peaks, though EUR-JPY has so far failed to surpass the one-month high the cross saw yesterday. The Yen's descent comes amid ongoing risk-on conditions in global markets, with further conciliatory moves happening on the U.S.-China trade front (Trump announcing a two-week delay in the latest round of tariffs on Chinese goods). Key U.S. data is looming up, too, with CPI and retail sales data are up tomorrow and Friday, respectively. We expect the data to affirm an ongoing benign price picture and a flat August performance in the retail sector, following strong July activity.

                [EUR, USD]
                EUR-USD took a rotation lower, to the 1.1020 area from levels above 1.1050, which was driven by broad, albeit moderate, declines in the common currency. The low for the week, seen on Monday at 1.1015, looks vulnerable. Market narratives are pointing to possible position adjusting into tomorrow's ECB policy announcement, along with German Chancellor Merkel's pouring cold water on the idea of fiscal stimulus. With the remarks of Fed Chair Powell still reverberating -- that the U.S. outlook was still a "favorable" one, with the economy "in a good place" -- EUR-USD looks likely to retain a downward bias for now. U.S. CPI and retail sales data are up tomorrow and Friday, respectively, where we expect an ongoing benign price picture to be painted and a flat performance in the retail sector. Such outcomes would hardly provide a dollar-buying cue, but would neither prompt to hit-the-sell-button reaction. A big focus will be on tomorrow's ECB meeting, which is widely expected bring further easing measures. The event risk is that the package of measures will fall short of what markets have been pricing in, since, without regulatory changes, there is limited room for government bond purchases to be extended significantly. We are expecting a small 10 bp cut in the deposit rate to -0.50%, with a tiered system to limit the impact of negative rates. As for EUR-USD, overall we retain a low-conviction bearish view for the week ahead. Support comes in at 1.0998-1.1000.

                [USD, JPY]
                USD-JPY printed a fresh six-week peak at 107.84 in what is now a third consecutive day of ascent, which is part of what is now a third consecutive week of gains. AUD-JPY and EUR-JPY posted six-week and one-month highs, respectively, while other Yen crosses also rose as the Japanese currency continued to see its safe haven premium unwind. News that hawkish U.S. national security advisor, John Bolton, was fired by Trump (Bolton claims he resigned), has been something of a sentiment shifter in markets, maintaining buoyancy in global stock markets while sparking a 1%-pus dive in oil prices. Expectations for stimulus of the fiscal kind in Europe and China are also in the mix, offsetting a recent descaling in expectations for stimulus of the monetary kind by the Fed and ECB. Then there is the recent apparent de-thawing in U.S.-China relations, with face-to-faces set for early next month and with U.S. Treasury Secretary Mnuchin signalling earlier in the week "lots of progress on talks"." We have, of course, many times heard such upbeat rhetoric in the many previous rounds of the so-far fruitless trade discussions, though apparently the show of optimism has still enough to influence near-term sentiment. For now, the Yen looks likely to remain on a downwardly bias track.

                [GBP, USD]
                Sterling has settled since posting six-week highs against the dollar, euro and yen, among other currencies, earlier in the week. Overall, the Pound's price action is remaining buoyant, reflecting the sharply downsized odds for a no-deal Brexit scenario as soon as October 31 (with a no-deal at a later date contingent on how the upcoming UK election turns out). It is now legally forbidden for the UK to exit the EU on Halloween without a deal on divorcing terms, unless Parliament votes for it, which isn't going to happen. Some hardliner Brexiteers have urged PM Johnson to fulfil his "do or die" promise and become a "martyr" to the cause by moving to take the UK out of the EU on October 31, which could lead to his imprisonment for contempt, though much as speculation that the Queen would deny giving the royal ascent to the anti-no-deal legislation, such "hopes" won't likely come to anything. Boris looks to be trying to salvage a bad situation by showing some formerly lacking vigour in trying to persuade the EU to throw him some bones of concession on the Irish backstop, though none have come his way as yet -- and nor are any likely to come. EU officials, including the Irish PM on Tuesday, have been making clear that they are prepared and willing to continue the negotiation on the other side of a no-deal Brexit, not unreasonably anticipating that the reality of a no-deal circumstance would be much more painful for the UK (population about 65 mln) than for the EU-27 (population about 450 mln).

                [USD, CHF]
                EUR-CHF has remained buoyant after printing a six-week high on Tuesday at 1.0968, which extended the rebound from the 26-month low seen on Tuesday at 1.0811. The pickup in risk appetite in global markets, and reduced risk for a no-deal Brexit, has taken the pressure off the ECB as it heads into next Thursday's government council meeting. This has helped float the Euro while concurrently fostering an unwinding in the Franc's safe haven premium (such as it is given the punishing -0.75% deposit rate in Switzerland).

                [USD, CAD]
                USD-CAD recouped to around 1.3200 after posting a new six-week low on Tuesday, at 1.3134. A near 4% decline in oil pries from Tuesday's peak, which was catalysed by the departure of hawkish-on-Iran U.S. national security advisor, John Bolton, has weighed on the Canadian currency relative to its U.S. counterpart and other commodity currencies, which have for the most part been benefiting from the improved backdrop of risk appetite in global markets. The divergence has lifted AUD-CAD into six-week terrain, with the cross showing a gain of nearly 1% from week-ago levels. The cross has been in a distinct bear trend since April, so the rebound may be tempting for contrarian speculators (though AUD-JPY would surely be a better route). USD-CAD has resistance at 1.3234-35.

                XE Currency Blog

                Topics6593 Posts6638
                By XE Market Analysis September 12, 2019 5:37 am
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                  XE Market Analysis Posts: 4539
                  XE Market Analysis: Europe - Sep 12, 2019

                  USD-JPY printed a fresh six-week high at 108.16 ahead of the London interbank open, since settling back near the 118.0 mark. The price action is similar to yesterday's, with AUD-JPY and GBP-JPY having concurrently posted new six-week peaks, though EUR-JPY has so far failed to surpass the one-month high the cross saw yesterday. The yen's descent comes amid ongoing risk-on conditions in global markets. President Trump provided the latest injection of positivity by announcing that the latest round of tariff increases on Chinese goods imports will be delayed by two weeks. Markets have reacted in pavlovian-style, with stock markets rallying in Asia and S&P 500 futures rising after the cash version of the index closed on Wall Street yesterday with a 0.7% gain, while currencies with high-beta characteristics have outperformed in the forex realm, particularly against the yen in accordance with the inverse correlation the Japanese currency has with global-wide shifts in risk appetite. Elsewhere, EUR-USD has steadied after taking a rotation lower yesterday, recouping back above 1.1000 after printing an eight-day low at 1.0985. The pairing is now back to near net unchanged levels from where it was a week ago. The focus is on the upcoming ECB policy announcement, which is widely expected to bring further easing measures. We are expecting a small 10 bp cut in the deposit rate to -0.50%, with a tiered system to limit the impact of negative rates. There is some scope for market-moving impact. The event risk has been that the package of measures will fall short of what markets had until recently been pricing in, though there has over the last week been some down-adjusting in stimulus expectations. Key U.S. data is looming up, too, with CPI and retail sales data are up tomorrow and Friday, respectively. We expect the data to affirm an ongoing benign price picture and a flat August performance in the retail sector, following strong July activity.

                  [EUR, USD]
                  EUR-USD has steadied after taking a rotation lower yesterday, recouping back above 1.1000 after printing an eight-day low at 1.0985. The pairing is now back to near net unchanged levels from where it was a week ago. The focus is on the upcoming ECB policy announcement, which is widely expected to bring further easing measures. We are expecting a small 10 bp cut in the deposit rate to -0.50%, with a tiered system to limit the impact of negative rates. There is some scope for market-moving impact. The event risk has been that the package of measures will fall short of what markets had until recently been pricing in, though there has over the last week been some down-adjusting in stimulus expectations. Key U.S. data is looming up, too, with CPI and retail sales data are up tomorrow and Friday, respectively. We expect the data to affirm an ongoing benign price picture and a flat August performance in the retail sector, following strong July activity. Such outcomes wouldn't provide a dollar-buying cue, but would neither prompt a hit-the-sell-button reaction. As for EUR-USD, overall we retain a low-conviction mildly bearish view into next week's FOMC, assuming that the ECB pulls sufficiently on the stimulus lever.

                  [USD, JPY]
                  The Yen continued to descend amid ongoing risk-on conditions in global markets. President Trump provided the latest injection of positivism by announcing that the latest round of tariff increases on Chinese goods imports will be delayed by two weeks. Pavlovian-style, stock markets rallied in Asia, S&P 500 futures lifted after the cash version of the index closed on Wall Street yesterday with a 0.7% gain, while currencies with higher beta characteristics have outperformed in the forex realm, particularly against the Yen in accordance with the inverse correlation the Japanese currency has with global-wide shifts in risk appetite. Trump's concession on the trade front follows the departure of the hawkish U.S. national security advisor John Bolton from the administration, which has been a tonic for markets by potentially/presumably heralding a softening in stance with regard to Iran. Expectations for stimulus of the fiscal kind in Europe and China are also in the mix, offsetting a recent descaling in expectations for stimulus of the monetary kind by the Fed and ECB. The mood music could change quickly. On the U.S.-China trade front, we have, of course, many times heard upbeat rhetoric in the many previous rounds of the so-far fruitless trade discussions. For now, the Yen looks likely to remain on a downwardly bias track.

                  [GBP, USD]
                  Sterling has gone into directional a hold down, holding in mixed and mostly narrow ranges against most other currencies over the last couple of days. Cable looks to have found an equilibrium of sorts after rebounding about 3% out of the major-trend low seen last week at 1.1958. Regarding Brexit, Parliament closed on Tuesday, due to Prime Minister Johnson's controversial "proroguing" manoeuvre, which has shut down Parliament for five weeks, until October 14. Despite this, dramas are continuing at a pace. A Scottish court earlier ruled yesterday that the prorogation was illegal, and one of the MPs that was last week expelled from the Conservative Party called for Johnson to resign if there is substance to the ruling. No.10 is sticking to its guns, however, stating that there will be no reopening of Parliament, expressing confidence in its legal position. Our hunch is that nothing will become of the Scottish court ruling, though developments warrant close monitoring. Johnson, meanwhile, has been stating that a deal with the EU is still possible by October 18, though there is a lack of specifics, and we know his team hasn't presented the EU with any fresh proposals with regard to how the Irish border backstop issue -- the major sticking point of Breixt and proven prime minister slayer -- might be resolved. What is certain is that the UK is headed for a general election, most realistically in late November or early December, which will boil down to contest between pro-Brexit parties and the others, which take either pro-remain-in-the-EU and/or a pro-second reference positions.

                  [USD, CHF]
                  EUR-CHF has remained buoyant after printing a six-week high on Tuesday at 1.0968, which extended the rebound from the 26-month low seen on Tuesday at 1.0811. The pickup in risk appetite in global markets, and reduced risk for a no-deal Brexit, has taken the pressure off the ECB as it heads into next Thursday's government council meeting. This has helped float the Euro while concurrently fostering an unwinding in the Franc's safe haven premium (such as it is given the punishing -0.75% deposit rate in Switzerland).

                  [USD, CAD]
                  USD-CAD has recouped to around 1.3200 after posting a new six-week low on Tuesday, at 1.3134. A near 4% decline in oil pries from Tuesday's peak, which was catalysed by the departure of hawkish-on-Iran U.S. national security advisor, John Bolton, has weighed on the Canadian currency relative to its U.S. counterpart. USD-CAD has resistance at 1.3234-35.

                  XE Currency Blog

                  Topics6593 Posts6638
                  By XE Market Analysis September 11, 2019 3:06 pm
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                    XE Market Analysis Posts: 4539
                    XE Market Analysis: Asia - Sep 11, 2019

                    The Dollar firmed up some in N.Y. trade on Wednesday, seeing the DXY rally from overnight lows of 98.33, topping at 98.74 at mid-morning. A slightly warmer U.S. PPI core outcome provided some support, though position squaring was behind EUR-USD slippage, ahead of Thursday's ECB meeting. We expect a 10 basis point rate cut from the Bank. EUR-USD slipped to 1.0985 lows early in the session, later peaking at 1.1010. USD-JPY was range bound between 107.81 and 1067.63. USD-CAD topped at 1.3215 from lows near 1.3150 as oil prices fell. Cable eased to 1.2313 lows.

                    [EUR, USD]
                    EUR-USD printed one-week lows of 1.0985, down from Asian highs of 1.1055. Dip- buying had been seen earlier in the week in anticipation of an underwhelming ECB easing, though unwinding of that sentiment appears to have been a driver this morning, with position squaring noted. Resistance is now at the 20-day moving average at 1.1055, with support seen at 1.0968, last Wednesday's low.

                    [USD, JPY]
                    USD-JPY maintained altitude through the N.Y. session, after printing better than one-month highs of 107.85 in early London morning trade. The pairing ranged between 107.81 and 107.63 since the open. Risk-on conditions have kept sellers away, as has reported progress on the U.S./China trade front. In addition, a Reuters source report on Tuesday indicated BoJ policymakers have discussed further easing measures, including cutting rates further into negative territory. Unless the trade war escalated again, we look for USD-JPY to remain in buy-the-dip mode.

                    [GBP, USD]
                    Cable looks to have found an equilibrium of sorts after rebounding about 3% out of the major-trend low seen last week at 1.1958. GBP-USD ranged between 1.2318 and 1.2350 through the N.Y. session. Regarding Brexit, Parliament closed on Tuesday, due to PM Johnson's controversial "proroguing" manoeuvre, which has shut down Parliament until October 14. Johnson continues to indicate that a deal with the EU is still possible by October 18, though there is a lack of specifics, and we know his team hasn't presented the EU with any fresh proposals with regard to how the Irish border backstop issue might be resolved.

                    [USD, CHF]
                    EUR-CHF eased back some after rallying for six straight sessions, printing a near six-week peak at 1.0971, and back under its 50-day moving average. The cross fell to 1.0910 lows in morning trade. The pickup in risk appetite in global markets, and reduced risk for a no-deal Brexit, has taken the pressure off the ECB as it heads into Thursday's government council meeting. This has helped float the euro and at the same time see an unwinding in the franc's safe haven premium (such as it is given the punishing -0.75% deposit rate in Switzerland).

                    [USD, CAD]
                    USD-CAD rallied over 1.3210, up from pre-open lows of 1.3140. The last 40 points of the rally came as WTI crude fell nearly $1.50/bbl in about a five-minute time span. Profit taking on long crude positions was noted, after the contract fail to make new highs after the large EIA inventory draw reported earlier. USD-CAD is back above its 50-day moving average of 1.3195, though will have to close above the level to shift the technical outlook.

                    XE Currency Blog

                    Topics6593 Posts6638
                    By xemarketanalysis September 11, 2019 9:51 am
                      xemarketanalysis's picture
                      xemarketanalysis Posts: 735
                      XE Market Analysis: The Canadian Dollar, The Currency Market’s Only Star Performer

                      OVERVIEW

                      • The plot thickens in the British parliament as there is a strong argument that suspension of proceedings is in fact illegal. The Supreme Court will rule next week.
                      • Despite significant tensions in many parts of the world, Central Bank meetings are strangely breezy.
                      • The Canadian dollar - a star in the currency galaxy. 

                      HIGHLIGHT

                      There is a strange lack of urgency or firm directional bias in the market as participants prefer to err on the side of cautious ahead of key event risks: the ECB and US Federal Reserve meetings. There is also little information and fresh development around US-China trade talks though there are signs of a thaw in the frosty relationship.

                      USD CAD 10 September 2019 Close 1.31542

                      US DOLLAR

                      The US economic docket will relatively light today with the release of Producer Price Index (PPI) which may drive the US dollar in short-term. Gold prices remain a touch within the key $1500 zone amidst fading appetite for risky assets. 

                      BRITISH POUND

                      GBP/USD continues to enjoy a rare sense of calmness in the market, oscillating around the mid-point of the 1.2300s. Currency market participants seem to have moved into a wait and see mode after the UK Parliament adopted a law to avoid a no-deal Brexit and voted against a fresh election. With the House now suspended for the next five weeks, the Pound waits for new announcements Brexit developments. PM Johnson could be the last action hero if he convinces the EU to adopt an alternative plan with no backstop.

                      EURO

                      The euro is trading near the lower end of the 1.1000-1.1060 range with the main focus on tomorrow’s ECB meeting.  Recent weakening in economic data points indicates that the Eurozone needs a monetary policy reset. Yet, with the next action already priced in, cautiousness is starting to creep into the market: disappointment that stimulus will fall short or not good enough could weigh on the EUR/USD.

                      CANADIAN DOLLAR

                      Recent economic data has revealed a certain degree of resilience underlying the Canadian economy despite global trade disputes. Yet, it does not imply that the country is totally immune to the ripple effects of anti-trade measures. The loonie keeps a bid tone against the greenback, fetching 76 cents US, a two-month high. USD/CAD is expected to consolidate within narrow ranges with a bias to further downside. 

                      AUSTRALIAN DOLLAR

                      The Aussie is hanging tough against the greenback and sits around the 0.6800s, as investors are very optimistic that trade talks will resume between the US of A and China. 

                      FEATURED CURRENCY

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