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By XE Market Analysis July 19, 2019 7:17 am
    XE Market Analysis's picture
    XE Market Analysis Posts: 4423
    XE Market Analysis: North America - Jul 19, 2019

    The Dollar settled at firmer levels after the New York walked back the dovish remarks of Williams yesterday. The narrow trade-weighted USD index (DXY) was showing a near 0.3% gain heading into the New York interbank open, at 97.02, up from the 16-day low see late yesterday at 96.67. At the close yesterday, Fed funds futures were still discounting about a 40% chance for the Fed to cut by 50 bp, though this was down from near 70% odds being implied in the wake of Williams' speech. The biggest mover so far today has been EUR-USD, with the Euro coming under some pressure following a more benign than expected 1.2% y/y reading in June German PPI data, and with Italian bonds coming under pressure with Deputy Minister Salvini publicly flirting with the idea of calling a snap election. EUR-USD printed a low at 1.1230, which is 52 pips down on yesterday's post-Wiliams high. EUR-JPY, EUR-GBP and other Euro crosses also declined. USD-JPY, meanwhile, climbed back above 107.50 after yesterday printing a 24-day low at 107.21. The Pound consolidated gains it saw yesterday on news that backbench members of parliament passed an amendment, by a solid majority of 41, aimed at preventing the new prime minister from "proroguing" (i.e. suspending) parliament as a means to force a no-deal Brexit. Cable held in the lower-to-mid 1.2500s, off from the four-day high seen yesterday at 1.2558.

    [EUR, USD]
    EUR-USD settled near 1.1250 after posting a 12-day high at 1.1282. The pair continues to be buffeted by fine-tuning Fed policy expectations, the latest phase of which has been for increased emphasis on the possibility for an outsized 50 bp cut on July 31. This should keep the pressure on U.S. over Bund yield differentials and in turn keep EUR-USD underpinned, even though the ECB is concurrently heading toward gear-shifting to an explicit easing bias. At the moment, we take a neutral-to-bullish view of EUR-USD. The pair has trended lower from early 2018 through to March this year, but has since stabilized as the Fed's bias as re-oriented to the dovish side. Support comes in at 1.1193-95.

    [USD, JPY]
    USD-JPY climbed back above 107.50 after printing a 24-day low at 107.21. The price action reflected broader Dollar movement, with the U.S. currency finding footing after weakening during the New York PM session yesterday. We retain a bearish view of USD-JPY, with the Dollar trending lower as markets reassess the chances for an outsized Fed easing. Richly valued global stock markets also look vulnerable, given trade concerns and with Q2 corporate reports expected to show an earnings recession. USD-JPY has resistance at 107.70-72. The June-25 low at 106.77 provides a downside waypoint.

    [GBP, USD]
    The Pound has consolidated gains it saw yesterday on news that backbench members of parliament passed an amendment, by a solid majority of 41, aimed at preventing the new prime minister from "proroguing" (i.e. suspending) parliament as a means to force a no-deal Brexit. It may still be possible for the new PM -- which is almost certain pro-no-deal-Brexit Boris Johnson -- to pull off a proroguing manoeuvre, but the new amendment will make it difficult. This in turn could increase the odds for Boris, assuming he is anointed as the new leader next Tuesday, to risk calling a new general election, which some recent polls suggest would restore him as PM with Conservative Party majority of around 40. Given this, we don't advise taking a bullish view of the Pound at this juncture. Cable yesterday printed a four-day high at 1.2558, aided higher in party by weakening in the Dollar. Resistance comes in at 1.2561-63.

    [USD, CHF]
    EUR-CHF has put in a couple of weeks of steady, range-bound trading after dropping sharply in mid June as markets adjusted to increased prospects for the ECB to return to the dovish policy tap. The cross printed a two-year low at 1.1057 before recouping to levels around 1.1100. The advance of the Franc against the Euro will be displeasing to the SNB (the EUR-CHF cross being a good proxy on the Swiss currency's trade weighted value). The SNB restated at its quarterly policy review last month that downside risks to the economy have increased, and that the overall policy setting "remains as expansionary as before." The central bank also nudged its inflation forecast lower, now expecting CPI to average just 0.6% y/y this year, 0.7% in 2020, and 1.1% y/y in 2021. With the ECB increasingly under pressure to ease policy again, the SNB remains eager to counter Franc appreciation, especially against the Euro. Assuming the ECB remains on the path of further monetary policy easing, we would expect EUR-CHF retain a declining bias. The SNB's -0.75% deposit rate and threat of tactical intervention hasn't been sufficient to arrest recent appreciation of the Franc.

    [USD, CAD]
    USD-CAD posted a fresh nine-month low at 1.3016 yesterday, driven by a shifting U.S. versus Canadian yield dynamic as markets re-consider the possibility for a large 50 bp rate cut by the Fed at the late July FOMC. This has helped offset recent sharp decline in oil prices, although news that the U.S. navy shot down an Iranian drove has now given crude markets an underpinning. We judge USD-CAD to be remaining in bear trend that's been unfolding since late May, with the pair having posted a lower weekly low for seven consecutive weeks now (including this one). Trend resistance comes in at 1.3064-66. As for the BoC, the central bank maintained a neutral bias last week as it delivered the widely expected no change in the 1.75% rate setting. Officials did however emphasize that the trade and geopolitical backdrops are clouding the outlook. Policy remains data driven for the BoC, which will "pay particular attention to developments in the energy sector and the impact of trade conflicts on the prospects for Canadian growth and inflation."

    XE Currency Blog

    Topics6446 Posts6491
    By XE Market Analysis July 19, 2019 4:17 am
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      XE Market Analysis Posts: 4423
      XE Market Analysis: Europe - Jul 19, 2019

      The Dollar found a footing after weakening during the New York PM session yesterday. The narrow trade-weighted USD index (DXY) has settled around the 96.85 mark, up from the 16-day low seen late yesterday at 96.67, which was the culmination of a 0.6% decline. The low was seen as U.S. Treasury yields hit two-week and 10-day lows in the case of 2- and 10-year paper, respectively, which New York Fed's Williams said policymakers should not wait for economic disaster to hit before adding stimulus. The New York Fed subsequently clarified that Williams' remarks were not about immediate policy direction, which has see both Treasury yields and the dollar lift during pre-Europe trading in Asia. The U.S. 10-year T-note yield still remains over 7 bp down on the week, while Fed funds futures settled to pricing in about a 40% chance of a 50 bp rate cut on July 31 after discounting nearly 70% odds for such a move in the initial wake of Williams' speech. In the mix has been news that the U.S. Navy shot down an Iranian drone in a "defensive" strike. Among the main currency pairings, EUR-USD settled near 1.1250 after posting a 12-day high at 1.1282. USD-JPY climbed back above 107.50 after printing a 24-day low at 107.21. The Pound consolidated gains it saw yesterday on news that backbench members of parliament passed an amendment, by a solid majority of 41, aimed at preventing the new prime minister from "proroguing" (i.e. suspending) parliament as a means to force a no-deal Brexit.

      [EUR, USD]
      EUR-USD settled near 1.1250 after posting a 12-day high at 1.1282. The pair continues to be buffeted by fine-tuning Fed policy expectations, the latest phase of which has been for increased emphasis on the possibility for an outsized 50 bp cut on July 31. This should keep the pressure on U.S. over Bund yield differentials and in turn keep EUR-USD underpinned, even though the ECB is concurrently heading toward gear-shifting to an explicit easing bias. At the moment, we take a neutral-to-bullish view of EUR-USD. The pair has trended lower from early 2018 through to March this year, but has since stabilized as the Fed's bias as re-oriented to the dovish side. Support comes in at 1.1193-95.

      [USD, JPY]
      USD-JPY climbed back above 107.50 after printing a 24-day low at 107.21. The price action reflected broader Dollar movement, with the U.S. currency finding footing after weakening during the New York PM session yesterday. We retain a bearish view of USD-JPY, with the Dollar trending lower as markets reassess the chances for an outsized Fed easing. Richly valued global stock markets also look vulnerable, given trade concerns and with Q2 corporate reports expected to show an earnings recession. USD-JPY has resistance at 107.70-72. The June-25 low at 106.77 provides a downside waypoint.

      [GBP, USD]
      The Pound has consolidated gains it saw yesterday on news that backbench members of parliament passed an amendment, by a solid majority of 41, aimed at preventing the new prime minister from "proroguing" (i.e. suspending) parliament as a means to force a no-deal Brexit. It may still be possible for the new PM -- which is almost certain pro-no-deal-Brexit Boris Johnson -- to pull off a proroguing manoeuvre, but the new amendment will make it difficult. This in turn could increase the odds for Boris, assuming he is anointed as the new leader next Tuesday, to risk calling a new general election, which some recent polls suggest would restore him as PM with Conservative Party majority of around 40. Given this, we don't advise taking a bullish view of the Pound at this juncture. Cable yesterday printed a four-day high at 1.2558, aided higher in party by weakening in the Dollar. Resistance comes in at 1.2561-63.

      [USD, CHF]
      EUR-CHF has put in a couple of weeks of steady, range-bound trading after dropping sharply in mid June as markets adjusted to increased prospects for the ECB to return to the dovish policy tap. The cross printed a two-year low at 1.1057 before recouping to levels around 1.1100. The advance of the Franc against the Euro will be displeasing to the SNB (the EUR-CHF cross being a good proxy on the Swiss currency's trade weighted value). The SNB restated at its quarterly policy review last month that downside risks to the economy have increased, and that the overall policy setting "remains as expansionary as before." The central bank also nudged its inflation forecast lower, now expecting CPI to average just 0.6% y/y this year, 0.7% in 2020, and 1.1% y/y in 2021. With the ECB increasingly under pressure to ease policy again, the SNB remains eager to counter Franc appreciation, especially against the Euro. Assuming the ECB remains on the path of further monetary policy easing, we would expect EUR-CHF retain a declining bias. The SNB's -0.75% deposit rate and threat of tactical intervention hasn't been sufficient to arrest recent appreciation of the Franc.

      [USD, CAD]
      USD-CAD posted a fresh nine-month low at 1.3016 yesterday, driven by a shifting U.S. versus Canadian yield dynamic as markets re-consider the possibility for a large 50 bp rate cut by the Fed at the late July FOMC. This has helped offset recent sharp decline in oil prices, although news that the U.S. navy shot down an Iranian drove has now given crude markets an underpinning. We judge USD-CAD to be remaining in bear trend that's been unfolding since late May, with the pair having posted a lower weekly low for seven consecutive weeks now (including this one). Trend resistance comes in at 1.3064-66. As for the BoC, the central bank maintained a neutral bias last week as it delivered the widely expected no change in the 1.75% rate setting. Officials did however emphasize that the trade and geopolitical backdrops are clouding the outlook. Policy remains data driven for the BoC, which will "pay particular attention to developments in the energy sector and the impact of trade conflicts on the prospects for Canadian growth and inflation."

      XE Currency Blog

      Topics6446 Posts6491
      By XE Market Analysis July 18, 2019 12:46 pm
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        XE Market Analysis Posts: 4423
        XE Market Analysis: Asia - Jul 18, 2019

        The Dollar attempted to rally in N.Y. on Thursday following in-line jobless claims, and a stronger than expected Philly Fed index, though later faded as Wall Street sold off and Treasury yields pulled back from highs. The DXY opened at 97.16 lows, rallied to 97.25 highs, before fading to 97.13. EUR-USD bottomed at 1.1215 after the early data, then make its way over 1.1230, while USD-JPY peaked at 108.01, later falling back under 107.80. USD-CAD was an outlier, topping just under 1.3100 as oil prices plunged better than 3%. Cable meanwhile, ranged between 1.2465 and 1.2500.

        [EUR, USD]
        EUR-USD has remained above Wednesday's seven-session low of 1.1200, bottoming at 1.1205, after peaking at 1.1244 (the pairing's 50-day moving average) in London morning trade. The Euro continues to find solid support into the 1.1200 level, though risk for the EUR remains from the ECB, with a shift to an explicit easing bias expected by many at next week's meeting, or at subsequent meetings. EUR-USD support comes at the July 9 low of 1.1193, with resistance remaining at the 50-day moving average at 1.1244.

        [USD, JPY]
        USD-JPY recovered some from the better than two-week lows printed overnight, trading over 107.90 from lows of 107.62. The pairing closed under its 20-day moving average of 108.00 on Wednesday, which now becomes the next resistance level. General risk-off conditions, led by global slowing,trade war threats, and wobbly equity markets, will likely continue to support the risk-sensitive Yen, with upside USD-JPY potential expected to be limited.

        [GBP, USD]
        Cable printed a fresh two-day high at 1.2494, extending the rebound from yesterday's 27-month low at 1.2382. News that UK Parliament has backed a new amendment aimed at blocking a no-deal Brexit was a clear buying cue for market participants. Backbench members of parliament are attempting to to block the reported desire of Boris Johnson (who is likely to become the new prime minister next week) to suspend parliament as a means to drive the UK out of the EU without a deal. Given the amendment passed with a solid 41 majority, Boris, assuming he does become the new PM, may well be tempted to risk calling a general election.

        [USD, CHF]
        EUR-CHF remained above the two-year low of 1.1056 seen in N.Y. on Tuesday, coming on the back of weak Germany ZEW figures, which weighed on the Euro, helping the cross lower. The pairing advanced to 1.1089 in N.Y. on Thursday, though faded again on General Euro weakness. The advance of the Franc against the Euro will be displeasing to the SNB (the EUR-CHF cross being a good proxy on the Swiss currency's trade weighted value). The SNB restated at its quarterly policy review last month that downside risks to the economy have increased, and that the overall policy setting "remains as expansionary as before." With the ECB increasingly under pressure to ease policy again, the SNB remains eager to counter Franc appreciation, especially against the Euro. Assuming the ECB remains on the path of further monetary policy easing, we would expect EUR-CHF retain a declining bias.

        [USD, CAD]
        USD-CAD traded a narrow range overnight, bottoming at 1.3042 in Asia dealings, before rallying to 1.3063 in early North America. The USD was on a slightly lower path overall after the U.S. close on Wednesday, though has perked up a bit into the open. Oil prices perked up some early in the session, though USD-CAD later headed to session highs of 1.3095, a seven-session top, dragged up by another oil price sell-off. WTI crude was down better than 2% on the day, trading under $55.50. The pairing runs into the 20-day moving average at 1.3098, and above there, buy-stops are likely over the 1.3100 mark.

        XE Currency Blog

        Topics6446 Posts6491
        By xemarketanalysis July 18, 2019 10:50 am
          xemarketanalysis's picture
          xemarketanalysis Posts: 704
          Currency Market Analysis: Sterling Rises Following Barnier Comments and Better Than Expected Retail Sales

          OVERVIEW

          • Better-than-expected retail numbers in the UK are giving sterling much-needed support
          • EU Chief Negotiator Michel Barnier signalled a willingness to discuss terms on the Irish backstop
          • Stock markets, the price of gold, and crude oil prices are mostly down in today's trading

          HIGHLIGHT

          We have seen the pound strengthen this morning following comments from the EU’s Chief Negotiator Michel Barnier stating that they are ready to work on alternative arrangements for the Irish Border. This comes ahead of a parliamentary vote later today aimed at reducing the probability that Boris Johnson can suspend Parliament and force through a no-deal Brexit. UK retail sales figures released today are stronger than expected, showing growth against the forecasted contraction.

          At the time of writing, this has resulted in the pound reversing this week's earlier losses. How much momentum is in this move remains to be seen but indications that the EU is willing to flex a little is positive for the pound, as would any legal challenges or changes in government procedure that reduce the probability of a hard Brexit.

          US DOLLAR

          The US Dollar Index (DXY) is back to the 97.20 range, as the Philly Fed Manufacturing Index returned above estimates at 21.8 for July, up from June's 0.3. The greenback has struggled this week after President Trump indicated concerns about how negotiations are faring between the US and China trade delegations. The DJI, NASDAQ, and S&P 500 stock markets are down in early trading, led by weak earnings reports from Samsung and Netflix.

          Positive signals around potential US-Iran negotiations are weighing on the price of oil, as WTI Crude is priced at US$56.64 a barrel, down by 0.14 today.  Gold is also down by a couple of dollars to $1,424.10 an ounce. US Treasury Secretary Steve Mnuchin said he does not foresee any change to US monetary policy in the near future. 

          BRITISH POUND

          EUR GBP is now just under 0.90 following a ray of sunshine on the pound which emanated from better-than-expected retail numbers, and news that the EU is willing to revisit Brexit terms on the backstop between Northern Ireland and the rest of Ireland in respect to trade goods. 

          EURO

          EUR USD sank on news that the European Central Bank is revising their inflation goal to just under 2 percent. The pair is now at 1.12162, down from 1.12424. The FTSE 100, DAX, CAC 40, IBEX 35, and Stoxx 600 stock markets are all down so far today, while the FTSE MIB is up by just over 72 points and is at 22,150.

          CANADIAN DOLLAR

          USD CAD sank on news that the Canadian Price Index lost steam, and came in at 2.0%. The pair has support around the mid 1.3000s, yet news that manufacturing sales weren't as strong as predicted is not doing the loonie any favours. 

          AUSTRALIAN DOLLAR

          Australia's positive jobs report has boosted the AUD USD to near the 0.7045-50 supply zone. Good news on the labour front could give the Reserve Bank of Australia the breathing room it needs to hold interest rates in the near term and strengthen the Aussie at the same time. 

          FEATURED CURRENCY

          XE Currency Blog

          Topics6446 Posts6491
          By XE Market Analysis July 18, 2019 7:16 am
            XE Market Analysis's picture
            XE Market Analysis Posts: 4423
            XE Market Analysis: North America - Jul 18, 2019

            The Dollar rebounded after printing fresh lows against the Euro, Yen and a number of other currencies in early European trading. This saw EUR-USD correct to around 1.1210 from the two-day high seen earlier at 1.1243. A rekindling in expectations for the Fed to entertain an outsized 50 bp rate hike at the upcoming FOMC meeting, sparked by a WSJ report suggesting that trade negotiations between the U.S. and China are at a "standstill," had be weighing on the U.S. currency. USD-JPY lifted back to around 107.90 from a two-week low at 107.62. Japanese trade data today also revealed a worse-than-expected 6.7% y/y contraction in exports, which have shrank for seven straight months now. There was also an unexpected rate cut, of 25 bp, by South Korea's central bank. The Pound rallied, aided initially by Dollar softness before gaining versus other currencies following above-forecast UK retail sales data. Cable printed a two-day high at 1.2486, extending the rebound from the 27-month low seen yesterday at 1.2382, while EUR-GBP looks to be set to make today its first down day since last Friday, posting a three-day low at 0.8980. UK June retail sales unexpectedly rose 1.0% y/y following a 0.6% y/y contraction in May. The median forecast had been for a 0.3% decline.

            [EUR, USD]
            EUR-USD has corrected a little from highs, pressing to around 1.1220 from the two-day high seen earlier at 1.1243. A rekindling in expectations for the Fed to entertain an outsized 50 bp rate hike at the upcoming FOMC meeting, sparked by a WSJ report suggesting that trade negotiations between the U.S. and China are at a "standstill," had be weighing on the U.S. currency. As for the Euro side of the equation, there remain reasons to be not-too-bullish, including the economic-slowing impact of Brexit-related uncertainty, which has been affecting activity on both sides of the channel. Upcoming ECB meetings, starting with the one next week, have shift to a "live" status, with the central bank considering a gear-shift to an explicit easing bias. At the moment, we take a neutral view of EUR-USD. The pair has trended lower from early 2018 through to March this year, but has since stabilized as the Fed shifted to a dovish bias. This rough equilibrium looks likely to persist for now. Support comes in at 1.1193-95.

            [USD, JPY]
            USD-JPY sank to a two-week low at 107.62. Further declines look likely, with the Dollar trending lower as markets reassess the chances for an outsized Fed easing following a WSJ report claiming that U.S. and China trade negotiations are at a "standstill". A turn lower in global stock markets also looks like it might sustain, given trade concerns and with Q2 corporate reports expected to show an earnings recession. Japanese trade data today also revealed a worse-than-expected 6.7% y/y contraction in exports, which have shrank for seven straight months now. There was also an unexpected rate cut, of 25 bp, by South Korea's central bank, which has had the effect of fanning rekindling speculation for the Fed to be more aggressive at the stimulus spigot. USD-JPY has resistance at 108.00-03. The June-25 low at 106.77 provides a downside waypoint.

            [GBP, USD]
            The Pound has rallied, aided by a generally softer, but also gaining versus other currencies following above-forecast UK retail sales data. Cable printed a two-day high at 1.2486, extending the rebound from the 27-month low seen yesterday at 1.2382 while EUR-GBP looks to be set to make today its first down day since last Friday, posting a three-day low at 0.8980. UK June retail sales unexpectedly rose 1.0% y/y following a 0.6% y/y contraction in May. The median forecast had been for a 0.3% decline. But the underlying rolling three-month rate slowed to 0.7% from 1.6% in the month prior, while timely forward-looking survey data out of the UK and anecdotal evidence point to an economy in stagnation as a consequence of prolonged Brexit-related uncertainty and slowing growth in continental Europe. Then there is the increased odds for a no-deal Brexit scenario. Both the final two candidates to become the new Conservative Party leader favour a no-deal-if-necessary Brexit, with Boris Johnson looking more than likely to be crowned the new prime minister next Tuesday. Boris has been reported to be considering proroguing Parliament (i.e. suspending the session) ahead of the October-31 Brexit deadline in a bid to block parliamentary members from stopping a no-deal Brexit.

            [USD, CHF]
            EUR-CHF has put in a couple of weeks of steady, range-bound trading after dropping sharply in mid June as markets adjusted to increased prospects for the ECB to return to the dovish policy tap. The cross printed a two-year low at 1.1057 before recouping to levels around 1.1100. The advance of the Franc against the Euro will be displeasing to the SNB (the EUR-CHF cross being a good proxy on the Swiss currency's trade weighted value). The SNB restated at its quarterly policy review last month that downside risks to the economy have increased, and that the overall policy setting "remains as expansionary as before." The central bank also nudged its inflation forecast lower, now expecting CPI to average just 0.6% y/y this year, 0.7% in 2020, and 1.1% y/y in 2021. With the ECB increasingly under pressure to ease policy again, the SNB remains eager to counter Franc appreciation, especially against the Euro. Assuming the ECB remains on the path of further monetary policy easing, we would expect EUR-CHF retain a declining bias. The SNB's -0.75% deposit rate and threat of tactical intervention hasn't been sufficient to arrest recent appreciation of the Franc.

            [USD, CAD]
            USD-CAD has settled lower over the last day, returning to levels around 1.3050, leaving an eight-day high at 1.3093. The nine-month low seen last Friday is at 1.3018. A sharp drop in oil prices, with the WTI benchmark showing a near 6% decline from week-ago levels, on signs of easing tensions between the U.S. and Iran brough some pressure on the Canadian Dollar, which has held put a floor under USD-CAD, though broader declines in the U.S. buck have been diminishing the impact of this. We still judge USD-CAD to be amid a distinct bear trend that's been unfolding since late May, with the pair having declined in five of the last six weeks. Trend resistance comes in at 1.3071-73. The Fed's course to policy easing has been driving the downward bias. As for the BoC, the central bank maintained a neutral bias last week as it delivered the widely expected no change in the 1.75% rate setting. Officials did however emphasize that the trade and geopolitical backdrops are clouding the outlook. Policy remains data driven for the BoC, which will "pay particular attention to developments in the energy sector and the impact of trade conflicts on the prospects for Canadian growth and inflation."

            XE Currency Blog

            Topics6446 Posts6491
            By XE Market Analysis July 18, 2019 3:46 am
              XE Market Analysis's picture
              XE Market Analysis Posts: 4423
              XE Market Analysis: Europe - Jul 18, 2019

              The Dollar has traded softer amid a reappraisal for the chances of the Fed entertaining an outsized 50 bp rate hike at the upcoming FOMC meeting, which has been concomitant with a WSJ report suggesting that trade negotiations between the U.S. and China are at a "standstill." This was followed by fresh evidence of the impact that trade tensions have been having, with Japanese trade data revealing a worse-than-expected 6.7% y/y contraction in exports, which have shrank for seven straight months now. There was also an unexpected rate cut, of 25 bp, by South Korea's central bank, which has had the effect of fanning rekindling speculation for the Fed to be more aggressive at the stimulus spigot. In the mix is an article in the London Times saying that the UK's official economic forecaster, the Office for Budget Responsibility, will later today publish revised forecasts showing the UK economy falling into recession in 2020 in the event that the country leaves the EU without a deal on October 31, which comes with the EU's chief Brexit negotiator, Barnier, saying that there will be no fresh negotiation of the Brexit withdrawal agreement while warning that the UK will have to "face the consequences" of a no-deal scenario. The net impact of all the above is weaker stock markets and a weaker Dollar. The narrow trade-weighted USD index is down by over 0.5% from the high seen on Tuesday. EUR-USD printed a two-day high at 1.1243 and USD-JPY a two-week low at 107.62.

              [EUR, USD]
              EUR-USD has been lifted by a turn lower in the Dollar, which has retraced about half the gains it saw during the first two days of the week. This put EUR-USD to a two-day high at 1.1243. A rekindling in expectations for the Fed to entertain an outsized 50 bp rate hike at the upcoming FOMC meeting, sparked by a WSJ report suggesting that trade negotiations between the U.S. and China are at a "standstill," has weighed on the U.S. currency. As for the Euro side of the equation, there remain reasons to be not-too-bullish, including the economic-slowing impact of Brexit-related uncertainty, which has been affecting activity on both sides of the channel. Upcoming ECB meetings, starting with the one next week, have shift to a "live" status, with the central bank considering a gear-shift to an explicit easing bias. At the moment, we take a neutral view of EUR-USD. The pair has trended lower from early 2018 through to March this year, but has since stabilized as the Fed shifted to a dovish bias. Support comes in at 1.1193-95.

              [USD, JPY]
              USD-JPY sank to a two-week low at 107.62. Further declines look likely, with the Dollar trending lower as markets reassess the chances for an outsized Fed easing following a WSJ report claiming that U.S. and China trade negotiations are at a "standstill". A turn lower in global stock markets also looks like it might sustain, given trade concerns and with Q2 corporate reports expected to show an earnings recession. Japanese trade data today also revealed a worse-than-expected 6.7% y/y contraction in exports, which have shrank for seven straight months now. There was also an unexpected rate cut, of 25 bp, by South Korea's central bank, which has had the effect of fanning rekindling speculation for the Fed to be more aggressive at the stimulus spigot. USD-JPY has resistance at 108.00-03. The June-25 low at 106.77 provides a downside waypoint.

              [GBP, USD]
              The Pound looks set to remain biased to underperform, on net, versus the other main currencies. Both the final two candidates to become the new Conservative Party leader favour a no-deal-if-necessary Brexit, with Boris Johnson looking more than likely to be crowned the new prime minister next Tuesday. News that Boris is considering proroguing Parliament (i.e. suspending the session) ahead of the October-31 Brexit deadline in a bid to block parliamentary members from stopping a no-deal Brexit has been been heaping bearish fuel on sterling's fire. The London Times, meanwhile, has reported that the UK's official economic forecaster, the Office for Budget Responsibility, will later today publish revised forecasts showing the UK economy falling into recession in 2020 in the event that the country leaves the EU without a deal on October 31, which comes with the EU's chief Brexit negotiator, Barnier, saying that there will be no fresh negotiation of the Brexit withdrawal agreement while warning that the UK will have to "face the consequences" of a no-deal scenario. Cable yesterday printed a fresh 27-month low at 1.2382, though has rebounded some amid a broader wave of Dollar underperformance.

              [USD, CHF]
              EUR-CHF has put in a couple of weeks of steady, range-bound trading after dropping sharply in mid June as markets adjusted to increased prospects for the ECB to return to the dovish policy tap. The cross printed a two-year low at 1.1057 before recouping to levels around 1.1100. The advance of the Franc against the Euro will be displeasing to the SNB (the EUR-CHF cross being a good proxy on the Swiss currency's trade weighted value). The SNB restated at its quarterly policy review last month that downside risks to the economy have increased, and that the overall policy setting "remains as expansionary as before." The central bank also nudged its inflation forecast lower, now expecting CPI to average just 0.6% y/y this year, 0.7% in 2020, and 1.1% y/y in 2021. With the ECB increasingly under pressure to ease policy again, the SNB remains eager to counter Franc appreciation, especially against the Euro. Assuming the ECB remains on the path of further monetary policy easing, we would expect EUR-CHF retain a declining bias. The SNB's -0.75% deposit rate and threat of tactical intervention hasn't been sufficient to arrest recent appreciation of the Franc.

              [USD, CAD]
              USD-CAD has settled lower over the last day, returning to levels around 1.3050, leaving an eight-day high at 1.3093. The nine-month low seen last Friday is at 1.3018. A sharp drop in oil prices, with the WTI benchmark showing a near 6% decline from week-ago levels, on signs of easing tensions between the U.S. and Iran brough some pressure on the Canadian Dollar, which has held put a floor under USD-CAD, though broader declines in the U.S. buck have been diminishing the impact of this. We still judge USD-CAD to be amid a distinct bear trend that's been unfolding since late May, with the pair having declined in five of the last six weeks. Trend resistance comes in at 1.3071-73. The Fed's course to policy easing has been driving the downward bias. As for the BoC, the central bank maintained a neutral bias last week as it delivered the widely expected no change in the 1.75% rate setting. Officials did however emphasize that the trade and geopolitical backdrops are clouding the outlook. Policy remains data driven for the BoC, which will "pay particular attention to developments in the energy sector and the impact of trade conflicts on the prospects for Canadian growth and inflation."

              XE Currency Blog

              Topics6446 Posts6491
              By XE Market Analysis July 17, 2019 3:15 pm
                XE Market Analysis's picture
                XE Market Analysis Posts: 4423
                XE Market Analysis: Asia - Jul 17, 2019

                The Dollar turned modestly lower through the N.Y. morning session, pulling back from one-week highs seen on Tuesday. The DXY bottomed at 97.17, after opening at session highs of 97.37. Softer U.S. housing starts data weighed some on the Greenback, as did a pullback in Treasury yields. EUR-USD ranged between 112.10 and 112.30, closing near the highs, while USD-JPY bottomed just over the 108.00 mark, coming from highs of 108.32. USD-CAD ranged between 1.3080 and 1.3035. Cable opened near 1.2400, later heading to 1.2455 highs. The USD is largely priced in for a 25 basis point Fed rate cut at the end of the month, and recent ranges will likely hold up until the FOMC announcement on July 31.

                [EUR, USD]
                EUR-USD recovered slightly from seven-session lows of 1.1200 seen in London morning trade, peaking at 1.1233 into the London close. Short covering at the 1.1200 mark was reported, while softer U.S. housing data, and lower Treasury yields supported as well. Brexit concerns have weighed on economic activity on the continent as well as the U.K., and could limit Euro gains going forward. Risk for the EUR comes from the ECB as well, with a shift to an explicit easing bias expected by many at next week's meeting, or at subsequent meetings. EUR-USD support comes at the July 9 low of 1.1193, with resistance at the 50-day moving average at 1.1244.

                [USD, JPY]
                USD-JPY headed to intra day lows in morning trade, printing 108.02, and down from earlier highs of 108.32. The pairing took its cue from Wall Street, which turned narrowly mixed performance ahead of the open, into sharper losses in late morning trade. Treasury yields edged lower as well, adding additional pressure to USD-JPY. The 20-day moving average, currently at 107.98 is the first support level, followed by Tuesday's low of 107.82.

                [GBP, USD]
                Sterling has settled higher after posting fresh trend lows against the Dollar. Cable posted a 27-month low at 1.2382, extending a distinct bear trend that Pound has been enduring since early May. This comes with the deleterious economic effects of prolonged Brexit-related uncertainty having become increasingly palpable, with the UK economy now in a state of stagnation. Markets have also been factoring increased odds for a no-deal Brexit as Boris Johnson heads to a more-than-likely victory in the Conservative Party's leadership context.

                [USD, CHF]
                EUR-CHF recovered from a two-year low of 1.1056 seen in N.Y. on Tuesday, coming on the back of weak Germany ZEW figures, which weighed on the Euro, helping the cross lower. The pairing advanced to 1.1110 overnight, though faded again on General Euro weakness. The advance of the Franc against the Euro will be displeasing to the SNB (the EUR-CHF cross being a good proxy on the Swiss currency's trade weighted value). The SNB restated at its quarterly policy review last month that downside risks to the economy have increased, and that the overall policy setting "remains as expansionary as before." With the ECB increasingly under pressure to ease policy again, the SNB remains eager to counter Franc appreciation, especially against the Euro. Assuming the ECB remains on the path of further monetary policy easing, we would expect EUR-CHF retain a declining bias.

                [USD, CAD]
                USD-CAD initially dipped to 1.3055 from 1.3065, then topped near 1.3080 following the cooler Canada CPI outcome, and the less than forecast improvement in manufacturing shipments. The pairing had been on the decline overnight, falling from over 1.3090 on a partial recovery of Tuesday's sharp drop in WTI crude prices. Oil moved up to $58.36 highs from $57.08 lows on Tuesday. USD-CAD later bottomed at 1.3035, before moving higher as oil prices again headed lower. The 20-day moving average at 1.3104 marks resistance for USD-CAD.

                XE Currency Blog

                Topics6446 Posts6491
                By XE Market Analysis July 17, 2019 7:45 am
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                  XE Market Analysis Posts: 4423
                  XE Market Analysis: North America - Jul 17, 2019

                  EUR-USD edged out a fresh eight-day low at 1.1199 in early London trading before settling back in the lower 1.1200s, with an upward revision in Eurozone June HICP data giving the euro some buoyancy. The low had been the product of dollar, which was given a boost yesterday following above-forecast industrial production and retail sales data out of the U.S. The data took the edge off Fed easing expectations, though a 25 bp cut on July 31 is still being fully discounted by Fed fund futures. USD-JPY has settled below yesterday's three-day peak at 108.37. The pair has been in a bear trend for some 12 weeks now, declining in the latest week after rising over the prior two weeks. Cable hit a 27-month low at 1.2382, and EUR-GBP a six-month high at 0.9051. This is now the 10th week out of the last eleven that Sterling has seen a new lower low against the euro, while this is the fifth week out of the last six that the Pound has seen a lower low in the case against the dollar. Markets have been factoring increased odds for a no-deal Brexit, with Boris Johnson looking set to be anointed the new UK prime minister next Tuesday. USD-CAD consolidated lower after yesterday printing a five-session high at 1.3093. Oil prices today found a toehold after dropping 3.5% yesterday.

                  [EUR, USD]
                  EUR-USD edged out a fresh eight-day low at 1.1199 in early London trading before settling back in the lower 1.1200s, with an upward revision in Eurozone June HICP data giving the euro some buoyancy. The low had been the product of dollar, which was given a boost yesterday following above-forecast industrial production and retail sales data out of the U.S. The data took the edge off Fed easing expectations, though a 25 bp cut on July 31 is still being fully discounted by Fed fund futures. As for the Euro side of the equation, there remain reasons to be not-too-bullish, including the economic-slowing impact of Brexit-related uncertainty, which has been affecting activity on both sides of the channel. Upcoming ECB meetings, starting with the one next week, have shift to a "live" status, with the central bank considering a gear-shift to an explicit easing bias. Overall, we retain a neutral-to-bearish view of EUR-USD. Recent U.S. data have on net been near-or-above forecasts, and included warmer than forecast June inflation figures, which should ensure the Fed refrains from anything more than a 25 bp cut at its late-July FOMC meeting. EUR-USD has support at 1.1199-1.1202 and resistance at 1.1238-41.

                  [USD, JPY]
                  USD-JPY has settled below yesterday's three-day peak at 108.37. The pair has been in a bear trend for some 12 weeks now, declining in the latest week after rising over the prior two weeks. Resistance comes in at 108.45-48. Japan's calendar this week brings the June trade report (Thursday), where a JPY 300.0 bln surplus is expected. The June national CPI (Friday) is forecast to cool to 0.6% y/y from 0.7% overall, and to 0.6% y/y from 0.8% on a core basis. The May all-industry index (Friday) is penciled in at 0.2% m/m from 0.9%.

                  [GBP, USD]
                  Cable hit a 27-month low at 1.2382, and EUR-GBP a six-month high at 0.9051. This is now the 10th week out of the last eleven that Her Majesty's currency has seen a new lower low against the euro, while this is the fifth week out of the last six that the Pound has seen a lower low in the case against the dollar. This comes with the deleterious economic effects of prolonged Brexit-related uncertainty having become increasingly palpable, with the UK economy now in a state of stagnation. Markets have been factoring increased odds for a no-deal Brexit, with Boris Johnson looking set to be anointed the new UK prime minister next Tuesday.

                  [USD, CHF]
                  EUR-CHF has put in a couple of weeks of steady, range-bound trading after dropping sharply in mid June as markets adjusted to increased prospects for the ECB to return to the dovish policy tap. The cross printed a two-year low at 1.1057 before recouping to levels around 1.1100. The advance of the Franc against the Euro will be displeasing to the SNB (the EUR-CHF cross being a good proxy on the Swiss currency's trade weighted value). The SNB restated at its quarterly policy review last month that downside risks to the economy have increased, and that the overall policy setting "remains as expansionary as before." The central bank also nudged its inflation forecast lower, now expecting CPI to average just 0.6% y/y this year, 0.7% in 2020, and 1.1% y/y in 2021. With the ECB increasingly under pressure to ease policy again, the SNB remains eager to counter Franc appreciation, especially against the Euro. Assuming the ECB remains on the path of further monetary policy easing, we would expect EUR-CHF retain a declining bias. The SNB's -0.75% deposit rate and threat of tactical intervention hasn't been sufficient to arrest recent appreciation of the Franc.

                  [USD, CAD]
                  USD-CAD printed a five-session high at 1.3093 yesterday, putting in a little distance from the nine-month low seen on Friday at 1.3022. A sharp drop in oil prices yesterday on signs of easing tensions between the U.S. and Iran added some pressure on the Canadian Dollar, while the U.S. buck has been in demand. We still judge USD-CAD to be amid a distinct bear trend that's been unfolding since late May, having declined in five of the last six weeks. Trend resistance comes in at 1.3071-73. The Fed's course to policy easing has been driving the downward bias. As for the BoC, the central bank maintained a neutral bias last week as it delivered the widely expected no change in the 1.75% rate setting. Officials did however emphasize that the trade and geopolitical backdrops are clouding the outlook. Policy remains data driven for the BoC, which will "pay particular attention to developments in the energy sector and the impact of trade conflicts on the prospects for Canadian growth and inflation."

                  XE Currency Blog

                  Topics6446 Posts6491
                  By XE Market Analysis July 17, 2019 4:15 am
                    XE Market Analysis's picture
                    XE Market Analysis Posts: 4423
                    XE Market Analysis: Europe - Jul 17, 2019

                    The Dollar has settled to a consolidation at modestly lower levels after rallying yesterday. The narrow trade-weighted USD index (DXY) has steadied around 97.35, down from the one-week high seen yesterday at 97.55, though remaining higher by a net 0.6% on the week so far. EUR-USD has settled in the lower 1.1200s, above the eight-day low seen yesterday at 1.1202, and USD-JPY has remained off yesterday's three-day peak at 108.37. Slightly better than expected retail sales and production reports out of the U.S. yesterday encouraged markets to take a more circumspect view of Fed easing prospects, though both Fed Chair Powell and Chicago Fed's Evans maintained a dovish tone in remarks, keeping markets prepped for a 25 bp easing on July 31. The Australian Dollar came under particular pressure, which drove AUD-USD and AUD-JPY to respective three-day lows at 0.7002 and 75.72. A sharp, 3%-plus drop in iron ore futures (traded on the DCE exchange in China), was reportedly a factor weighing on the Aussie, while President Trump's threatening to put another $325 bln of tariffs on Chinese goods was also in the mix (with the antipodean currency widely viewed as a liquid forex market proxy on China). Elsewhere, the Pound has remained heavy after posting new major-trend lows against the Dollar and Euro, among other currencies, yesterday, with markets factoring in increased odds for a no-deal Brexit, with Boris Johnson looking set to become the new UK prime minister next Tuesday.

                    [EUR, USD]
                    EUR-USD has settled in the lower 1.1200s, above the eight-day low seen yesterday at 1.1202, which was a product of Dollar strength following above-forecast industrial production and retail sales data out of the U.S. The data took the edge off more Fed easing expectations, though a 25 bp cut on July 31 is still being fully discounted by Fed fund futures. As for the Euro side of the equation, there remain reasons to be not-too-bullish, including the economic-slowing impact of Brexit-related uncertainty, which has been affecting activity on both sides of the channel. Upcoming ECB meetings, starting with the one next week, have shift to a "live" status, with the central bank considering a gear-shift to an explicit easing bias. Overall, we retain a neutral-to-bearish view of EUR-USD. Recent U.S. data have on net been near-or-above forecasts, and included warmer than forecast June inflation figures, which should ensure the Fed refrains from anything more than a 25 bp cut at its late-July FOMC meeting. EUR-USD has support at 1.1200-02 and resistance at 1.1238-41.

                    [USD, JPY]
                    USD-JPY has remained off yesterday's three-day peak at 108.37. Slightly better than expected retail sales and production reports out of the U.S. yesterday encouraged markets to take a more circumspect view of Fed easing prospects, though both Fed Chair Powell and Chicago Fed's Evans maintained a dovish tone in remarks, keeping markets prepped for a 25 bp easing on July 31. USD-JPY has been in a bear trend for some 12 weeks now, declining in the latest week after rising over the prior two weeks. Resistance comes in at 108.45-48. Japan's calendar this week brings the June trade report (Thursday), where a JPY 300.0 bln surplus is expected. The June national CPI (Friday) is forecast to cool to 0.6% y/y from 0.7% overall, and to 0.6% y/y from 0.8% on a core basis. The May all-industry index (Friday) is penciled in at 0.2% m/m from 0.9%.

                    [GBP, USD]
                    The Pound has remained heavy after posting new major-trend lows against the Dollar and Euro, among other currencies, yesterday, with markets factoring in increased odds for a no-deal Brexit, with Boris Johnson looking set to become the new UK prime minister next Tuesday. Cable hit a 27-month low at 1.2386, and EUR-GBP a six-month high at 0.9051. This is now the 10th week out of the last eleven that Her Majesty's currency has seen a new lower low against the Euro, while this is the fifth week out of the last six that the Pound has seen a lower low in the case against the Dollar. This comes with the deleterious economic effects of prolonged Brexit-related uncertainty having become increasingly palpable, with the UK economy now in a state of stagnation.

                    [USD, CHF]
                    EUR-CHF has put in a couple of weeks of steady, range-bound trading after dropping sharply in mid June as markets adjusted to increased prospects for the ECB to return to the dovish policy tap. The cross printed a two-year low at 1.1057 before recouping to levels around 1.1100. The advance of the Franc against the Euro will be displeasing to the SNB (the EUR-CHF cross being a good proxy on the Swiss currency's trade weighted value). The SNB restated at its quarterly policy review last month that downside risks to the economy have increased, and that the overall policy setting "remains as expansionary as before." The central bank also nudged its inflation forecast lower, now expecting CPI to average just 0.6% y/y this year, 0.7% in 2020, and 1.1% y/y in 2021. With the ECB increasingly under pressure to ease policy again, the SNB remains eager to counter Franc appreciation, especially against the Euro. Assuming the ECB remains on the path of further monetary policy easing, we would expect EUR-CHF retain a declining bias. The SNB's -0.75% deposit rate and threat of tactical intervention hasn't been sufficient to arrest recent appreciation of the Franc.

                    [USD, CAD]
                    USD-CAD printed a five-session high at 1.3093 yesterday, putting in a little distance from the nine-month low seen on Friday at 1.3022. A sharp drop in oil prices yesterday on signs of easing tensions between the U.S. and Iran added some pressure on the Canadian Dollar, while the U.S. buck has been in demand. We still judge USD-CAD to be amid a distinct bear trend that's been unfolding since late May, having declined in five of the last six weeks. Trend resistance comes in at 1.3071-73. The Fed's course to policy easing has been driving the downward bias. As for the BoC, the central bank maintained a neutral bias last week as it delivered the widely expected no change in the 1.75% rate setting. Officials did however emphasize that the trade and geopolitical backdrops are clouding the outlook. Policy remains data driven for the BoC, which will "pay particular attention to developments in the energy sector and the impact of trade conflicts on the prospects for Canadian growth and inflation."

                    XE Currency Blog

                    Topics6446 Posts6491
                    By XE Market Analysis July 16, 2019 1:44 pm
                      XE Market Analysis's picture
                      XE Market Analysis Posts: 4423
                      XE Market Analysis: Asia - Jul 16, 2019

                      Better than expected U.S. retail sales helped Dollar sentiment in N.Y. on Tuesday, with the DXY printing one-week highs of 97.36. Better earnings from the likes of Goldman Sachs, JP Morgan, and Wells Fargo did little to lift Wall Street, as major indices remained on either side of flat for much of the session. Treasury yields moved higher as well, also supportive of the USD. EUR-USD dipped to five-session lows of 1.1208. USD-JPY managed a 108.35 high, up from 107.90 levels at the open. USD-CAD idled inside of a 1.3025-50 trading band, while Cable printed new trend lows of 1.2397. Later, comments from Powell, speaking in Paris kept a 25 basis point rate cut on the table at the FOMC meeting at the end of July.

                      [EUR, USD]
                      EUR-USD continues to trickle lower, bottoming so far at 1.1208, after opening near 1.1225. The U.S. retail sales data helped Dollar sentiment, while ahead of the U.S. session, weak German ZEW confidence figures dropped, weighing on the Euro. The ZEW institute said "the continued negative trend in incoming orders in the German industry is likely to have reinforced the financial market experts' pessimistic sentiment". The pairing is well below its 50-day moving average at 1.1243 now, which will provide some resistance, and is within range of last week's July low of 1.1193.

                      [USD, JPY]
                      USD-JPY has added to the post-data rally, topping over 108.30, and up from opening lows of 107.92. The stronger retail sales outcome, along with accompanying firmer Treasury yields supported the pairing through the morning session. Wall Street was narrowly mixed from the open, which had little impact on the risk-sensitive Yen. USD-JPY support now comes at 107.98, the 20-day moving average, with resistance at 108.69, the 50-day moving average.

                      [GBP, USD]
                      Cable hit a fresh trend lows of 1.2397, partly on dollar strength and partly on sterling weakness. Higher than expected UK average income data was offset by a jump higher in jobless claims, while Brexit-related uncertainty, along with associated political developments that have increased the odds for a no-deal exit scenario, continue to preoccupy the market mindset with regard to sterling. The UK will have a new prime minister next week, with the Conservative Party's leadership party concluding next Tuesday. Boris Johnson is more than likely to succeed.

                      [USD, CHF]
                      EUR-CHF traded to a two-year low of 1.1056 in N.Y. on Monday. Weak Germany ZEW figures weighed on the Euro, helping the cross lower. The advance of the Franc against the Euro will be displeasing to the SNB (the EUR-CHF cross being a good proxy on the Swiss currency's trade weighted value). The SNB restated at its quarterly policy review last month that downside risks to the economy have increased, and that the overall policy setting "remains as expansionary as before." With the ECB increasingly under pressure to ease policy again, the SNB remains eager to counter Franc appreciation, especially against the Euro. Assuming the ECB remains on the path of further monetary policy easing, we would expect EUR-CHF retain a declining bias.

                      [USD, CAD]
                      USD-CAD moved up to three-session highs of 1.3064 in London morning trade, up from Monday lows near 1.3020. Oil price movements and general USD strength provided support most recently. WTI crude is off its recent highs, while the DXY printed one-week highs into the N.Y. open. We look for some consolidation to set in ahead of key Canada CPI and manufacturing data on Wednesday. We expect headline CPI to cool in June, likely leaving a 1.8% y/y outcome. cooler than the 2.4 y/y clip seen in May.

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