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By XE Market Analysis April 17, 2020 2:32 pm
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    XE Market Analysis: Asia - Apr 17, 2020

    The Dollar eased on Friday, as some of the gains seen earlier in the week came undone due to pre-weekend position squaring. Hopes for virus treatments, and the beginnings of plans to unlock economies resulted in risk-on conditions, lifting Wall Street, which also weighed on USD safe-haven demand. On the data front, leading indicators were slightly better than expected, but still extremely weak, though ultimately had little market impact. EUR-USD rallied from opening lows of 1.0835, later peaking at 1.0892. USD-JPY fell from early highs near 107.80, basing at 107.30 at mid-morning. USD-CAD opened over 1.4080, later falling under 1.4025, while GBP-USD moved from 1.2460 ahead of the open, later topping over 1.2515 after the London close.

    [EUR, USD]
    EUR-USD bounced from 1.0835 lows seen at the open, coming from a nine-session base of 1.0812 into the open, later peaking at 1.0892 ahead of the London close. Pre-weekend short covering was a driver, as risk-on conditions prevailed, following upbeat signs on the pandemic front, including plans to reopen economies, and, hopeful signs for virus treatments. The rapid deployment of monetary stimulus measures by the Fed, and expectations for more, have impacted the dollar in recent weeks, and will likely limit EUR-USD losses going forward.

    [USD, JPY]
    USD-JPY slipped from early highs of 107.93, bottoming at 107.30 by mid-morning. The move lower came on general Dollar selling into the weekend, with losses coming despite the risk-on conditions that usually weigh on the Yen. Safe-haven flows into the USD seen since mid-week have partly come undone, as recent talk of preparations to end lock downs, and encouraging news on the virus treatment front (Gilead), have impacted demand for Dollars. It will be a long road ahead until global economies get back on their feet, and there will likely be setbacks along the way. As a result, further Yen strength can be expected going forward.

    [GBP, USD]
    Cable topped at 1.2522 in London morning trade, subsequently drifted back to 1.24008 ahead of the N.Y. open. From there, taking its cue from broad USD selling seen through the morning, GBP-USD bounced back over 1.2515.The risk of a hard no-deal Brexit has re-emerged as a concern for the pound after a spokesman for the UK prime minister said yesterday that the pandemic has strengthened the need or the UK to be free of EU regulation after 2020 and that there will not be any extension to the post-Brexit transition, which expires at the end of the year.

    [USD, CHF]
    EUR-CHF bounced slightly in N.Y. trade on Friday, breaking a streak of four straight down days, giving the cross a bit of breathing space from the March 9 five-year low into. Hopes to end global lock down resulted in a risk-off session, allowing EUR-CHF to head to 1.0520 highs. Assuming the coronavirus crisis persists, as looks highly likely, this should maintain Swiss franc's safe haven premium, which should keep EUR-CHF directionally biased to the downside.

    [USD, CAD]
    USD-CAD rallied from 1.4005 in Asia to 1.4118 into the North American open, as oil prices fell to fresh 18 years lows. Since then, the pairing pulled back to 1.4012 on the back of a partial oil price recovery, and risk on conditions. In addition, the USD overall has come under some broad pressure today, as position squaring into the weekend steps in. Note the DXY touched better than one-week highs on Thursday.

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