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By XE Market Analysis April 21, 2020 2:37 pm
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    XE Market Analysis: Asia - Apr 21, 2020

    The Dollar dipped some in early N.Y. trade on Tuesday, later bouncing back modestly later in the session. Narrow ranges were in place through the session. Wall Street was hit hard again on uncertain earnings outlooks, and the deepening of the oil price rout. Today's data saw March exiting home sales fall an as-expected 8.5%, with sales likely pressured by virus lock downs. Bigger picture for the USD, the enormous liquidity injections and Dollar swap lines put in place by the Fed in March took care of the bulk of USD demand, and since then, we have seen major Dollar pairings trading ranges shrink markedly, and directional cues dry up some.

    [EUR, USD]
    EUR-USD has remained range bound, bottoming at 1.0817 before reported European buyers stepped in, taking the pairing to 1.0880 highs. As has been the case with other Dollar pairings, a period of consolidation appears to be under way. EUR-USD support comes at 1.0812, which was Friday's low, with resistance at 1.0918, representing the 20-day moving average.

    [USD, JPY]
    USD-JPY rallied to 107.82 highs, after opening under 107.40. After a softer start, the Dollar has perked up in late morning trade, though overall, remains inside recent trading ranges. Risk-off conditions have supported the USD, though further gains are likely to be limited, with the Dollar generally in a wait and see mode ahead of further pandemic unknowns. Friday's USD-JPY high of 108.08 marks resistance.

    [GBP, USD]
    Cable fell to over two-week lows of 1.2248 after the London close, having been on the decline through the session. A combination of no-deal Brexit risk and the difficulties the UK has in financing its current account deficit during times of heightened risk aversion in global markets has weighed on the pound. Brexit, while overshadowed by the pandemic, remains a concern that the UK leaves the EU's single market at year-end without a new trade deal with the EU. Negotiations between the UK and EU are recommencing this week via video conferencing. The UK government has continued to repeat that there will not be any extension of the post-Brexit transition, which expires at the end of the year.

    [USD, CHF]
    EUR-CHF was range bound in N.Y. trade on Tuesday, 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 to levels last seen on April 2, peaking at 1.4265, up from overnight lows of 1.4114. The move higher has come from the devastating selloff in crude oil, which has left the price of Western Canadian Select grade of heavy crude in negative territory. This has resulted in growing production cuts, dictated by a lack of storage infrastructure. The energy sector accounts for roughly 10% of Canada's economy. The April 2 high of 1.4299 is the next USD-CAD resistance level..

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