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By XE Market Analysis April 1, 2020 3:14 pm
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    XE Market Analysis: Asia - Apr 01, 2020

    The Dollar was mixed in N.Y. trade on Wednesday, though ranges overall were narrower than recent sessions. It was a risk-off session, as COVID-19 cases continued to rise unabated. Wall Street was sharply lower, while Treasury yields sank. Incoming data was better than expected, with ADP jobs losses less than forecast, and the manufacturing ISM falling less than expected. The data will continue to be overlooked until the virus picture clears. EUR-USD ranged between 1.0942 and 1.0903, as USD-JPY bottomed at 107.00 from opening highs near 107.60. USD-CAD based at 1.4133, later rebounding over 1.4240. Cable meanwhile, pulled back from near 1.2440, bottoming at 1.2373 in afternoon dealings.

    [EUR, USD]
    EUR-USD printed one-week lows of 1.0917 ahead of the London close, matching the European low seen ahead of the open. Later int the session, the EUR printed 1.0902 lows. The dollar has continued to traded generally firmer again, contrasting last week's pronounced underperformance. The recent narrowing in the dollar's yield advantage over the Eurozone, driven by the Fed's aggressive monetary policies, looks to have based out for now. Given the uncertainty surrounding the pandemic, we expect the USD to retain some of its safe-haven qualities, leading to a lower EUR-USD.

    [USD, JPY]
    USD-JPY fell to a two-week low of 107.00, down from over 107.60 at the N.Y. open. Risk-off has been the theme today, which has supported the Yen. With no end in sight for the pandemic, global economies will likely continue to contract, which will likely keep equities and yields on a downward path, which should continue to weigh on USD-JPY. The three-plus year low of 101.18 seen in March remains in focus.

    [GBP, USD]
    Cable faded from early highs of 1.2438, falling under 1.2375 later in the session. The Pound had underperformed even commodity currencies during the worst of the recent global liquidity crunch, which ran from about March 10th through to March 19th, before measures by the Fed and other central banks provided a mitigating impact. Sterling lost about 10% of its value in trade-weighted terms over this period, and tumbled by 12% versus the dollar, hitting a 35-year low, and a 11-year low against the euro. The worst now looks to be over for the pound, especially with markets starting to bet that the UK will ask the EU for an extension of its post-Brexit transition membership of the Union's customs union and single market.

    [USD, CHF]
    EUR-CHF traded under the 1.0600 mark in N.Y. on Wednesday, as risk-off conditions prevailed. Safe haven demand for the CHF will likely continue on and off amid heightening concerns about the global economic disruptions being caused by efforts to contain the coronavirus.

    [USD, CAD]
    USD-CAD rallied to 1.4272 highs into the North American open, with gains coming on the back of weak oil prices, and general risk-off conditions. The pairing has since ebbed to 1.4133 lows. Canada's oil patch got good news on Tuesday, which likely provided some support to the CAD. The pipeline company TC Energy said it will go ahead with the Keystone XL pipeline, which will push Canadian crude to refiners on the U.S. Gulf Coast. While the pipeline is not set to be completed until 2023, the move gave Canada oil prices, which had fallen under $5/bbl, some relief. For now, USD-CAD looks destined to remain inside its one-week range of about 1.3900 to 1.4300.

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