XE Market Analysis: Asia – Mar 30, 2017

XE Market Analysis

The dollar started the day on a stronger footing, getting a boost overall from an upgraded U.S. Q4 GDP revision. Stocks and yields moved higher, supportive of the greenback as well. Later, the dollar fell across the board, as CNBC reported that the Trump administration is assessing ways to penalize currency manipulators. Better risk taking levels though, saw the market take advantage of the brief sell-off, and the buck later rallied to session highs. After topping at 1.0753, EUR-USD printed 1.0685 lows after the London close. USD-JPY meanwhile, touched 111.00 lows, before rallying back to111.66. USD-CAD fell to eight-session lows of 1.3278 from 1.3345 highs on warmer Canadian prices data, and WTI crude’s rally to three week highs over $50/bbl. Cable bucked the trend, bouncing over 1.2520 on short covering following the official triggering of Article 50.

EUR-USD losses accelerated on the move under the earlier N.Y. low of 1.0722, trading now to a base of 1.0685. This is the lowest since March 15. Dovish leaning ECB speak this morning has weighed, along with widened Treasury/Bund spreads in favor of the dollar, with the 10-year moving out 4 basis points to 206 this morning. After failing to hold the 200-day moving average of 1.0886 on Monday, the pairing today has broken under its 20-day MA at 1.0706, and is poised to take out the 50-day MA at 1.0676.

USD-JPY recovered from the earlier “punish currency manipulators” story purportedly from the U.S. administration, as reported by CNBC. The pairing dipped to 111.00 lows, and has since topped at 111.52, just under the one-week highs of 111.54 printed early in the session after the improved U.S. GDP revision. The better risk backdrop, and firmed up Treasury yields have been supportive since then, while improving U.S. data, and generally hawkish Fedspeak should continue to put a floor under the pairing.

Cable rallied to two-day high territory, topping at 1.2524, and outperforming verus the other majors. The well-anticipated triggering of Article 50 yesterday hasn’t had much impact. Resistance is at 1.2541-42. We anticipate plenty more chop, but favour selling into any gains that reach the upper 1.20s on the basis of Brexit uncertainties and the Fed’s rate hiking path

EUR-CHF took a tumble, falling from near 1.0725 to 1.0691 lows. The move came following comments from the SNB’s Maechler, who said monetary policy must remain expansive, to guarantee price stability. He said that the recovery in in the country is not yet broad based and that the Franc remains “significantly overvalued”, which means negative rates remains necessary. In addition, a strong KOF leading indicators report supported the CHF. The cross has found support so far into the 50-day moving average of 1.0690.

USD-CAD fell to eight-session lows of 1.3305 following the mix of data, which revealed firm Canada IPPI and RMPI figures. The pairing had been on the decline earlier, as WTI crude rallied toward the key $50/bbl. USD-CAD had been trading on either side of its 20-day moving average, currently at 1.3386, though today, broke decisively below the level. The pairing later bottomed at 1.3278 as oil prices rallied to three-week highs of $50.45.

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