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By XE Market Analysis April 14, 2020 2:58 pm
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    XE Market Analysis: Asia - Apr 14, 2020

    The DXY fell to almost three-week lows of 98.84 from pre-open highs of 99.26. Risk-on conditions prevailed through the session, while the the Fed and Congress moves to flood the system with Dollars to combat the virus related cratering of the U.S. economy, have weighed on the USD for over a week now. Hopes for a sooner than later start to unlocking the economy supported Wall Street today, which was sharply higher. For data, import and export prices were both softer than expected though had little impact on FX. EUR-USD rallied to 1.0985 from opening levels near 1.0940, while USD-JPY fell to 106.98 from over 107.50. USD-CAD was whipsawed between 1.3925 and 1.3867, as Cable ran up from under 1.2550 to 1.2648.

    [EUR, USD]
    EUR-USD printed two-week highs of 1.0984 in N.Y. morning trade, up from pre-open lows near 1.0940. The Euro crossed its 50-day moving average of 1.0966 for the first time since April 1, and a close above the level will be taken as a technical positive. EUR-USD has been on a slight uptrend for the past week or so, as Dollar demand has been sated by the Fed's massive dollar swap and stimulus programs. Until something material changes in the markets, we look for a broader 1.0850 to 1.1000 range to hold up for now.

    [USD, JPY]
    USD-JPY bottomed at 106.98, its lowest since April 2. Broad Dollar weakness has been the driver of the pairing's downside, in the context of risk-on positioning, which was boosted by Chinese trade data for March showing an improvement in both imports and exports. Bigger picture, USD demand has faltered after the Fed's massive stimulus packages. USD-JPY support now comes at 106.92, which was the April 1 low. Resistance is at the 200-day moving average, currently sitting at 108.34.

    [GBP, USD]
    Cable ran up to a a fresh one-month high at 1.2648. Dollar weakness has been floating the pairing over the last couple of days. Overall, sterling has continued to hold up amid a backdrop of optimism in global stock markets, with the UK currency having become apt to correlative positively with risk appetite during the coronavirus crisis era. The UK virus lock down was extended for another three weeks, to March 7th, which had little impact on Sterling. GBP-USD resistance is at 1.2651, which represents the 200-day moving average.

    [USD, CHF]
    EUR-CHF headed to near three week lows of 1.0533 lows in N.Y. on Monday, despite the return of risk-on conditions. Safe haven demand for the CHF will likely continue on and off depending on the daily the level of concern about the global human and economic disruptions being caused by efforts to contain the coronavirus.

    [USD, CAD]
    USD-CAD rallied from overnight lows of 1.3863, topping at 1.3925 into the North American open. WTI crude recorded an eight-session low under $51.20, which supported the pairing into the open. USD-CAD later reversed lower, falling under 1.3870 on the back of a modest oil price recovery toward $22.00, and a sharp rebound in risk taking levels. CAD strength was not to last, as WTI crude fell as much as 10%, briefly under the key $20 mark. USD-CAD subsequently rallied over 1.3020. The BoC has its policy announcement on Wednesday, though is expected to keep rates unchanged at 0.25%. In March, the Bank cut a total of 150 basis points, while adding a commercial paper purchasing program, and a QE program aimed at buying GoC paper across the curve. Focus on Wednesday's announcement will be on any changes to those stimulus programs.

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