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By XE Market Analysis April 3, 2020 3:16 pm
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    XE Market Analysis: Asia - Apr 03, 2020

    The Dollar headed to near or at highs of the week against the Euro, Pound and Yen on Friday. The DXY printed seven-session highs of 100.85, though trading ranges were confined. Save-haven flows into the USD were maintained this week, coming despite the horrendous jobless claims on Thursday, and the much worse than expected employment report on Friday, which saw non-farm payrolls fall 701k. Wall Street took another hit to end the week, on the back of weak jobs, and ramping up U.S. virus cases. EUR-USD bottomed at 1.0773, while USD-JPY topped at 108.68, up from early lows of 108.25. USD-CAD rallied from 1.4095 to 1.4165. GBP-USD fell to 1.2205 from early highs of 1.2300.

    [EUR, USD]
    EUR-USD printed eight-session lows of 1.0773 at mid-morning, down modestly from pre-open highs over 1.0810. Relative to the rest of the week, Friday's trading band was narrow. The U.S. 10-year T-note versus Bund yield spread has resumed a narrowing path this week, falling to levels below 105 bp, which may be helping limit EUR-USD's downside momentum, although evidently not fully offsetting it. The spread was over 200 bp as recently as mid February, and the near 100 bp of narrowing is testament to the Fed's rate cuts and pledge of unlimited dollar supply. As a result, further EUR downside potential may be limited going forward..

    [USD, JPY]
    USD-JPY has been steady through the N.Y. session on Friday, after rallying in London morning trade. The pairing made its way to 108.68 highs early, from Asian lows of 107.80. Since then, a 108.65 to 108.36 trading band has held. Despite the risk-off conditions seen today, USD-JPY has held up fairly well, as pre-weekend short covering, followed by a dip under 107.00 on Wednesday kicked in. Next support is the 200-day moving average at 108.32, with resistance at the 50-day moving average of 108.76.

    [GBP, USD]
    Cable hit six-session lows of 1.2205 in N.Y. trade on Friday, down from 1.2395 highs seen in London morning trade. The final March U.K. composite PMI figure was revised down to a series-record of 34.0, though this was hardly surprising given the virus backdrop. The vast majority of the pound's losses this year were seen from March 10th through to March 21st, which marked the height of the recent spate of acute risk aversion in global markets that generated an epic liquidity crunch. The actions of the Fed and other central banks to satiate the demand for cash has given the pound a reprieve. Overall, we expect the pound to remain heavy as the coronavirus crisis persists.

    [USD, CHF]
    EUR-CHF traded to two-week lows of 1.0543 in N.Y. on Friday, as another risk-off session 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 bottomed at 1.4118 at mid-morning, down from intra day highs of 1.4224 seen ahead of the North American open. The surge in oil prices since yesterday's Trump tweet on ending the Saudi/Russia price war has kept the CAD on a bid footing, and many now expect some sort of coordinated effort to reduce oil production, when OPEC+ meets via teleconference on Monday. USD-CAD remains inside of Thursdays's trading range, with support now seen at 1.4080.

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