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Author Topic: XE Market Analysis: North America - Aug 22, 2018  (Read 165 times)

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XE Market Analysis: North America - Aug 22, 2018
« on: August 22, 2018, 09:10:41 am »
XE Market Analysis: North America - Aug 22, 2018

The Dollar has been trading mixed, edging out a fresh low against a generally firmer Euro while gaining on the Pound and Australian Dollar, among other currencies, and settling at near net unchanged levels in the case against the Yen. EUR-USD carved out a fresh two-week low at 1.1602, which surpassed yesterday's peak by 1 pip, according to our data. Cable, meanwhile, ebbed back under 1.2900, leaving yesterday's rebound peak at 1.2925 in the rear-view mirror, while EUR-GBP lifted to 12-day highs above 0.9000. AUD-USD also traded softer, posting a two-session low at 0.7333. USD-JPY lifted back toward 110.50 after meeting demand into 110.0 during the Tokyo session, leaving yesterday's eight-week low at 109.77 untroubled, despite a bout of Dollar selling that was seen on news that one of the two former Trump associates convicted yesterday directly implicated the president in campaign finance violations. There is conjecture in markets suggesting that legally and politically problematic convictions of Paul Manafort, the former Trump campaign chairman, and Michael Cohen, Trump's former personal lawyer, has tipped the Dollar balance a little in turns of reserve and currency overlay managers likely reaction. This is despite the U.S. constitution not allowing for criminal indictment of a sitting president (according to Justice Department interpretations cited by the Washington Post), while the Republicans, who control the House and Senate, are likely to be loathe to push for impeachment while Trump's base remains strong.

[EUR, USD]
EUR-USD met good demand at 1.1550-55 after dipping during the early part of the London AM session, and the pair has subsequently vaulted to an intraday high of 1.1594 before steadying. Yesterday's two-week high at 1.1601 has been left unchallenged thus far. The gains have mostly reflected broader Euro strength, with the common currency posting gains versus most other currencies, most notably Sterling and the Australian Dollar, which respective advances of 0.3% and 0.5%. There doesn't appear to have been any data or news or other catalysing development behind the move, though there is conjecture in markets suggesting that legally and politically problematic convictions of Paul Manafort, the former Trump campaign chairman, and Michael Cohen, Trump's former personal lawyer, has tipped the EUR-USD balance a little in turns of reserve and currency overlay managers likely reaction. This is despite the U.S. constitution not allowing for criminal indictment of a sitting president (according to Justice Department interpretations cited by the Washington Post), while the Republicans, who control the House and Senate, are likely to be loathe to push for impeachment while Trump's base remains strong. EUR-USD has resistance at 1.1612-14 and support at 1.1522-24.

[USD, JPY]
USD-JPY lifted back toward 110.50 after meeting demand into 110.0 during the Tokyo session. Yesterday's eight-week low at 109.77 has remained unchallenged, despite the bout of Dollar selling that was seen on news that one of the two former Trump associates directly implicated the president in campaign finance violations. A rebound in U.S. Treasury yields yesterday, which happened as the S&P 500 ascended to a fresh record high, and with today set to mark the longest bull run on record, has steadied the Dollar after Trump's efforts to talk it down, while the Yen has seen modest weakness against other currencies today. Stock markets in Asia have put in mixed performances; China is down after a two-day run higher, and S&P 500 futures are showing modest declines, correcting from record highs. USD-JPY has a one-month trend resistance line is at 110.88-90, ahead of the 20-day moving average, at 110.95.

[GBP, USD]
The Pound has been trading heavily today, with Cable being re-established back below 1.2900 after posting a rebound high at 1.2925 late yesterday, while EUR-GBP has lifted to fresh 12-day highs above 0.9000. Political and associated Brexit-related risks keeping the pound in a lower trading band than it otherwise would be. Negotiations re-commenced between the UK and the EU last week with time is running out quickly and a risk that Prime Minister May will face a leadership challenge. Cable has support at 1.2877-80 and resistance at 1.2975.

[USD, CHF]
EUR-CHF edged out an 12-day high at 1.1419 yesterday before ebbing back to the upper 1.1300s. The cross remains comfortably above the one-year that was seen at 1.1243 last Wednesday. Ankara's success in halting the rout of the Lira (although fundamentals remain worrisome) and the recommencement of talks between the U.S. and China are heading back to the negotiating table have given the franc opportunity to come off the safe-haven boil. SNB Vice Chairman Zurbruegg said last week that the central bank's ultra-accommodative monetary policy (negative interest rates coupled with tactical forex interventions) was justified in light of the franc's surge in the wake of the Turkish economic turmoil and flash of contagion in other emerging nations with high levels of dollar borrowings.

[USD, CAD]
USD-CAD posted a two-week low of 1.3013 yesterday amid general U.S. Dollar weakness. The pair has since traded moderately firmer, with the U.S. currency steadying and on news that the Canadian government denied a Politico report that there had been a "handshake" agreement with the U.S. on NAFTA. The breach of recent daily lows at 1.3050-52 mark a bearish development for the pairing. There still remains a built-in discount to the Canadian Dollar, relating to the NAFTA renegotiation, so USD-CAD will remain directionally sensitive to developments on this front. For now, directional bias looks to remain to the downside. The August-7 low at 1.2962 provides a downside waypoint. Resistance is at 1.3050-55.


Ref. http://community.xe.com/blog/xe-market-analysis/xe-market-analysis-north-america-aug-22-2018

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