The USD strengthened against most currencies on the back of today’s economic numbers, plus U.S. equity markets continue to move higher to record levels. Traders are still finding reasons to stay in dollar denominated assets, the Brexit situation is still a long way from settling, South East Asia, although it has calmed recently, it’s still on the back burner of most traders and analysts. Zimbabwe has a new leader, time will tell if things have really changed.
The Canadian dollar has reacted negatively to the U.S. data, plus oil has fallen slightly, even with the announced OPEC extension of production cuts. Expect the Canadian dollar to react negatively in the short run on any positive U.S. news, as oil prices will have likely peaked for the moment.
USDCAD 1.2796, 1.2773, 1.2761 1.2815, 1.2832, 1.2851
The dollar was mixed in N.Y. trade on Tuesday, with some choppy price action noted in both USD-JPY and GBP-USD. The former fell to session lows of 111.06 from near 111.45 after a reported N. Korea missile test. Cable meanwhile, rocketed up to 1.3371 highs from 1.3235 after reports circulated that the EU and U.K. had agreed up on monetary divorce bill of less that the EU had been demanding. EUR-USD softened some on this news, printing at 1.1852 low into the close. USD-CAD stayed above 1.2800 through most of the session, as oil price softness remained into Thursday’s OPEC meeting.
XE Market Analysis: Asia – Nov 28, 2017
EUR-USD touched session lows of 1.1854 in concert with the North Korean missile launch news, though was little impacted, unlike USD-JPY. The pairing had topped at 1.1900 into the early N.Y. data rounds, and slowly made its way lower through the session on the back of generally firm numbers. The pairing appeared to have been pushed lower by news of a less EU-favorable divorce payment outcome, which conversely saw cable surge higher.
USD-JPY got a lift earlier in the session, topping at 111.47 following stronger U.S. consumer confidence data. The pairing had been on the rise earlier, as Wall Street opened higher, and as gold was hit lower, reportedly on the back of a larger sell order at 9:30 EST. Later, USD-JPY fell from 111.44 to 111.06 following reports from the South Korean government, that Pyongyang fired a ballistic missile. Subsequent details were scarce. The 200-day moving average at 111.68 marks resistance now, with support at Monday’s 110.84 low.
Cable fell into four-session low territory into the London close, logging a low of 1.3220 base, which extended the correction from yesterday’s two-month high at 1.3383. Losses later came undone, as cable surged nearly 100 points to 1.3325 following Bloomberg headlines (citing The Telegraph) saying that the U.K. and EU have agreed on divorce terms. Another news outlet said the breakup cost will be GBP 45-55 bln. The EU had apparently been demanding GBP 60 bln, so a big win for the U.K., if the news pans out. The Ireland border issues remains a big sticking point, so not done yet.
EUR-CHF took a dive to 1.1646 lows in N.Y. trade, following reports that North Korea launched an ICBM. The cross had traded as high as 1.1700 in London. The move proved that the CHF has not lost all of its safe-haven bona fides, despite the negative interest rate environment.
USD-CAD dipped 10 points or so to 1.2785 following the mix of early data, where the U.S. advance trade deficit widened, and Canada IPPI and RMPI surged more than expected. The pairing later recovered back over 1.2800, and settled in on either side of the figure, with dip buying remaining in favor on the back of faltering oil prices. The pairing found support overnight ahead of the 20-day moving average, which currently stands at 1.2752.