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By XE Market Analysis April 6, 2020 2:50 pm
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    XE Market Analysis: Asia - Apr 06, 2020

    The Dollar was slightly higher overall in N.Y. on Monday, taking the DXY to eight-session highs of 100.93. Signs of pandemic "curve flattening" were reported around the world, including in hard-hit New York, which supported the Dollar, and saw Wall Street rally near 6%, and Treasury yields head higher. The economic calendar was empty to start the week. EUR-USD printed two-week lows of 1.0768, later heading back over the 108.00 mark. USD-JPY opened near 108.85 before bouncing to 109.20. USD-CAD ranged between 1.4102 and 1.4175, while Cable dipped to 1.2250, later recovering to near 1.2320.

    [EUR, USD]
    EUR-USD dipped to two-week lows of 1.0768 at mid-morning, later recovering to over 1.0815. The U.S. 10-year T-note versus Bund yield spread resumed a narrowing path last 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 rallied to seven-session highs of 109.38 in London morning trade, subsequently dipping to 108.85 into the N.Y. open, before heading up over 109.15. The risk-on backdrop has supported, taking equities and Treasury yields higher, as COVID-19 news has turned a bit more positive, with infection curves appearing to be entering a flattening phase. USD-JPY is back above its 20-, 50- and 200-day moving averages, which is a bullish development for the pairing.

    [GBP, USD]
    Cable pulled back from earl highs over 1.2325, bottoming at 1.2250 in N.Y. morning trade. The Pound had fallen in Asia in reaction to news that UK Prime Minister Johnson had been admitted to hospital 10 days after testing positive to the coronavirus. Cable posted a low at 1.2213 before recovering. The U.K. pandemic exit strategy from the lockdown is becoming clearer, as in other countries, that there will be a phased return to work as the rate of infection drops and declines, as the shortage of relevant medical supplies is being met, and as the capacity for testing people increases.

    [USD, CHF]
    EUR-CHF was fairly steady under 1.0600 in N.Y. on Monday, as risk appetite returned on hopeful virus signs. Safe haven demand for the CHF will likely continue on and off depending on the daily the level of concern about the global economic disruptions being caused by efforts to contain the coronavirus.

    [USD, CAD]
    USD-JPY rallied to seven-session highs of 109.38 in London morning trade, subsequently dipping to 108.85 into the N.Y. open, before heading up over 109.15. The risk-on backdrop has supported, taking equities and Treasury yields higher, as COVID-19 news has turned a bit more positive, with infection curves appearing to be entering a flattening phase. USD-JPY is back above its 20-, 50- and 200-day moving averages, which is a bullish development for the pairing.

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