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By XE Market Analysis April 8, 2021 1:49 pm
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    XE Market Analysis: Asia - Apr 08, 2021

    The Dollar was mostly lower in N.Y. trade on Thursday, leaving the DXY at near three-week lows of 92.00, down from 92.30 ahead of the open, and 92.48 highs in Asia. Disappointing weekly jobless claims weighed on the USD, as did softening Treasury yields. The pullback in yields this week, largely driven my easing inflation concerns and a dovish Fed, has been the main driver of Dollar weakness. Wall Street was mostly higher , though the Dow underperformed some. The S%P 500 hit another record high, while a resurgence in tech saw the NASDAQ outperform. Friday's U.S. calendar will have March PPI, which is expected up 0.5% from the same previously on an overall basis, and up 0.2% from the same in February on an ex-food and energy basis.

    [EUR, USD]
    EUR-USD failed to take out Wednesday's two-plus week high of 1.1915 in morning trade, peaking on Thursday at 1.1910 at mid-morning, and up from overnight lows of 1.1861. Treasury yields have remained softer this week, after printing 14-month highs last week. This has kept EUR-USD supported, and the Greenback overall has been under some pressure this week. After the London close, the pairing made fresh highs over 1.1925. However, given that yield differentials will remain a USD positive for the foreseeable future, and U.S. economic growth is likely to outstrip that of Europe for the remainder of the year, We continue to see EUR-USD risk to the downside.

    [USD, JPY]
    USD-JPY found good buying interest into the 109.00 level, after the pairing slid from 109.90 highs overnight. The pairing later edged up to 109.30 highs into the London close. Lower Treasury yields of late have allowed the rate-sensitive pairing to slip from the 13-month top of 110.97 last week, to 109.00 lows today. The previous surge higher had come in concert with 10-year Treasury note's move to 14-month highs. The 50-day moving average at 109.46 now marks resistance, with a breach there to bring the 110.00 level back into view. The 109.00 level is the nearest support for now.

    [GBP, USD]
    Cable eased to a seven-session low of 1.3818 low during the London morning session. The Pound has put in a lackluster performance of late, though has come a long way from lows seen at the start of this year, and during the first Covid outbreak in March of last year. Since hitting a near three-year high in February, the pairing has traded a familiar range between about 1.3700 and 1.4000. While we still expect further Sterling strength ahead, this consolidation phase may continue until the impact of both Covid on economic reopenings, and the economic fallout from Brexit clears itself up.

    [USD, CHF]
    The SNB maintained its expansionary policy stance. The statement stressed that the pandemic "is continuing to have a strong adverse effect on the economy", adding that despite the "recent weakening, the Swiss franc remains highly valued" and against that background the policy rate was held at -0.75% and the bank stressed that "it remains willing to intervene in the foreign exchange market as necessary". The bank will also continue to supply the banking system with liquidity on "generous" terms. Nothing really new there, despite the fact that the SNB lifted its conditional inflation forecast on the back of higher oil prices and a weaker CHF. EUR-CHF has held above the key 110.00 level for over a month now.

    [USD, CAD]
    USD-CAD ran into sellers overnight, just above its 1.2626 50-day moving average, topping at 1.2627 before pulling back to 1.2589 in London. The pairing has eased further in North American trade, so far bottoming at 1.2582. A softer USD has been the driver this morning, as the DXY tests Wednesday's two-plus low of 92.14. Oil prices have not had much impact on the CAD on Thursday, as WTI crude has been relatively range-bound through the session, confined to the $59 handle so far. Wednesday's 1.2564 low now marks USD-CAD support. The CAD is likely to steady into Friday's Canada March jobs report.

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