Finance Capital .info

XE Market Analysis: North America – Sep 30, 2016

The dollar made ground against the euro, which weakened across-the-board amid month-end related selling, while arriving to the early European PM near net unchanged versus the yen. Sterling carved out moderate gains following an unexpected revision higher in Q2 GDP, to +0.7% from 0.6%, and consumer confidence data for September showing a rebound not pre-Brexit vote levels. The UK data were part of a flood of end-of-month releases, which mostly had limited market reactions. The two-day oil price rally faltered, which saw the yen recoup intraday losses while putting a lid on commodity currencies.

[EUR, USD]
EUR-USD ebbed under 1.1200, earlier leaving a nine-day low at 1.1168. EUR-JPY and other euro crosses are also down, thought month-end demand for EUR-GBP from European central banks may have helped limited declines. The flurry of Eurozone data didn’t doesn’t appear to have impacted much. A close in EUR-USD below 1.1183-92, which encompasses Wednesday’s low and the current position of the 50-day moving average, would affirm a turning-bearish technical picture. The 200-day moving average is at 1.1161.

[USD, JPY]
USD-JPY have back most of yesterday’s gains in ebbing to back under 100.80. USD-JPY’s technical picture has turned more neutral, with the pairing failing to breach either of its 20- and 50-day moving averages, presently situated at 101.63 and 101.86, during the run higher yesterday. Key support is marked by recent range lows at 100.08 and 100.09.

[GBP, USD]
Sterling carved out moderate gains following an unexpected revision higher in Q2 GDP, to +0.7% from 0.6%, and consumer confidence data for September showing a rebound not pre-Brexit vote levels. The pound looks to have found its feet following a three-week period of declines versus the G3 currencies and other units. A sign of this was the fact that there was only a limited flurry of selling on Wednesday after BoE deputy governor Shafik said that “further monetary stimulus will be required at some point.” Nothing has changed on the UK’s fundamental front, and most forex participants have been overlooking incoming data showing a rebound in activity from the post-Brexit vote wobble and instead focusing on the long road ahead until the UK’s new relationship with the EU becomes clear. Both the Q3 BoE agents report and the British Chambers of Commerce have flagged falling business investment, which the latter expects to decline by 2.2% this year, and by 3.4% next year.

[USD, CHF]
EUR-CHF rebounded above 1.0850 after earlier tumbling to a two-month low of 1.0811. SNB intervention is seen as a possible driver of the rebound, although there is no official confirmation. The losses occurred amid broader euro decliners, which the cross tends to be sensitive to. Bigger picture, after seeing a one-year low at 1.0623 on June 24, in the immediate wake of the UK’s vote to leave the European Union, EUR-CHF looks to have settled, albeit with some chop and occasional SNB assistance, in an orbit centred around 1.0800-1.0900. More of the same seems likely.

[USD, CAD]
USD-CAD has experienced a choppy week of trading, mirroring the volatile, 3%-plus, swings in oil prices seen during the week. The pair has settled around the midway point of the week’s range, in the upper 1.31s. The pair failed to sustain gains above the 200-day moving average, presently at 1.3228, this week. Focus will be on how well Opec implements the agreed oil production cut as a sustained rise in crude prices would raise the terms of trade of the Canadian economy, which would be a positive lead for the Canadian dollar. USD-CAD has been without directional impulse for some four months now.

FinanceCapital.info

Add comment