Author Topic: XE Market Analysis: North America - Aug 27, 2018 (Read 190 times)

FXshooting · « **on:** August 27, 2018, 08:27:20 am »

XE Market Analysis: North America - Aug 27, 2018

The Dollar majors settled in narrow ranges during a London-less European AM session after the U.S. currency had rebounded some after posting fresh losses against the Euro and some other currencies during the early Asia-Pacific session. The USD index (DXY) was near flat, at 95.17, as of the late morning in Europe having lifted out of a three-session low at 95.00, which was seen in early Asia. EUR-USD settled above 1.1600 after posting a peak a 25-day peak at 1.1654. USD-JPY drifted lower, settling in the lower 111.0s after basing at a 110.93 low. This followed a short-lived lifted in early Tokyo trade, which left an intraday high at 111.34. The pair is in a consolidation after scaling to a three-week high on Friday at 111.48. Ditto for Yen crosses, which also turned lower after early-Tokyo-session gains. In EUR-JPY's case the early gain pushed the cross to a 25-day peak at 129.68. There hasn't been too much by way of fresh directional leads. Stock markets in Europe and Asia rallied, and S&P 500 futures extended gains seen in regular Wall Street trading on Friday. Chinese shares were supported by a rise in the Yuan to a two-and-a-half-week high after the PBoC's announced on Friday a re-introduction of a "counter-cyclical factor" in its daily fixing of USD-CNY as a means to halt a four-month tumble of the Chinese currency. The PBoC set the USD-CNY reference rate today at 6.8508, sharply down from Friday's 6.8710 fix.

[EUR, USD]
EUR-USD has drifted back towards 1.1600 after posting a peak a 25-day peak at 1.1654. Markets have continued to digest the slightly more dovish than expected speech by Fed Chairman Powell on Friday, where he stuck to the "policy gradualism" script with regard to tightening. This saw the USD index (DXY) edged out a three-session low at 95.00 in early Asia-Pacific trading. Despite recent gains, we still put greater odds for a sustained move to the downside than to the upside, expecting incoming U.S. data as likely to firm-up expectations for a 25 bp Fed hike in December, which would follow an already fully-anticipated 25 bp hike in September. Fed fund futures have been discounting about 50-50 odds for a December hike. We would also expect the Dollar to appreciate in the scenario of fresh bouts of risk aversion in global markets in the event that the trade war escalates further.

[USD, JPY]
USD-JPY has drifted lower, settling in the lower 111.0s after basing at a 110.93 low. This followed a short-lived lifted in early Tokyo trade, which left an intraday high at 111.34. The pair is in a consolidation after scaling to a three-week high on Friday at 111.48. Ditto for Yen crosses, which also turned lower after early-Tokyo-session gains. In EUR-JPY's case the early gain pushed the cross to a 25-day peak at 129.68. There hasn't been too much by way of fresh directional leads. Stock markets in Asia rallied, and S&P 500 futures extended gains seen in regular Wall Street trading on Friday, buoyed by Fed Chairman Powell's slightly more dovish than anticipated Jackson Hole speech on Friday, where he stuck to a "policy gradualism" stance. The Nikkei 225 is showing just over a 1% gain heading into the latter part of the PM session in Tokyo. Australia's ASX 200 finished with a 0.3% advance, a relative underperformer, while China's Shanghai Composite is among the outperformers with a 1.5% gain in post-lunch trading there. Chinese shares were supported by a rise in the Yuan to a two-and-a-half-week high after the PBoC's announced on Friday a re-introduction of a "counter-cyclical factor" in its daily fixing of USD-CNY as a means to halt a four-month tumble of the Chinese currency. The PBoC set the USD-CNY reference rate today at 6.8508, sharply down from Friday's 6.8710 fix.

[GBP, USD]
Trading has been thin today in the absence of London markets for a UK public holiday. Cable has been re-established back below 1.2900 after posting a rebound high at 1.2936 last Wednesday. Political and associated Brexit-related risks keeping the pound in a lower trading band than it otherwise would be. The UK government last week issued advice for individuals and businesses in the event of a no-deal Brexit, which, while apparently aiming to put to rest some of the scare stories that have been circulating in the populace, served to bring home the level of disruption this scenario would have on businesses. Negotiations re-commenced between the UK and the EU with time is running out and a risk that Prime Minister May will face a leadership challenge. Cable has resistance at 1.2877-80 and support at 1.2799-1.2800.

[USD, CHF]
EUR-CHF has settled near 1.1400, holding below last Tuesday's two-week high at 1.1419. The cross remains comfortably above the one-year that was seen at 1.1243 earlier in August. SNB Vice Chairman Zurbruegg said recently that the central bank's ultra-accommodative monetary policy (negative interest rates coupled with tactical forex interventions) was justified.

[USD, CAD]
USD-CAD has settled below 1.3100 after last week printing a one-week high at 1.3103. Hopes that the U.S. and Canada will "handshake" a NAFTA deal remain, although hopes on this front have had a tendency to disappoint, and price action in USD-CAD has become somewhat convoluted. A former resistance zone at 1.3050-55 now marks support.

Ref. http://community.xe.com/blog/xe-market-analysis/xe-market-analysis-north-america-aug-27-2018

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Author Topic: XE Market Analysis: North America - Aug 27, 2018 (Read 190 times)

FXshooting

XE Market Analysis: North America - Aug 27, 2018