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By XE Market Analysis April 22, 2020 2:08 pm
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    XE Market Analysis: Asia - Apr 22, 2020

    The Dollar was again range bound in N.Y. on Wednesday, though did manage small gains overall. Risk-on conditions returned, with Wall Street higher as oil prices rebounded, and as hopes for at least a partial unlocking of the country set in. There was little in the way of incoming data but for FHFA house prices, which had no market impact. Thursday's U.S. calendar will reveal weekly jobless claims, where we see another 4.0 mln claims. March new home sales should begin to show the pandemic impact, and are expected to fall to a 0.640 mln pace from 0.765 mln pace. EUR-USD today trade from 1.0877 highs to 1.0815 lows. USD-JPY made its way from 107.60 to 107.93, as USD-CAD was steady between 1.4115 and 1.4175. GBP-USD opened at highs over 1.2375, later easing to lows near 1.2300 after the London close.

    [EUR, USD]
    EUR-USD opened in N.Y. at 1.0877, before easing to 1.0815 lows after the London close. Consolidation trade has set in, with the pairing today remaining inside of Monday's high and Tuesday's low. The Dollar's yield advantage has narrowed since the start of the pandemic, leaving EUR-USD downside supported, while the Fed's massive stimulus package satisfied needed Dollar demand. Until new developments make themselves known, we look for a relatively steady 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 has put in another narrow trading range on Wednesday, managing a 107.52 to 107.87 band on an intra day basis, and a 107.62 to 107.93 since the N.Y. open. Consolidation continues as the pairing remains inside recent trading ranges, despite the swings between risk-on and risk-off conditions. Friday's USD-JPY high of 108.08 marks resistance, with support at Tuesday's 107.28 low.

    [GBP, USD]
    Cable posted a high at 1.2386 into the U.S. open, before turning lower, leaving yesterday's high at 1.2451 unchallenged. The Pound later fell back toward 1.2300 after the London close. The combo of the UK's open economy, current account deficit and outsized financial sector, makes the pound vulnerable to risk aversion in global markets, such as the pandemic crisis has wrought. The continued risk of the UK leaving the post-Brexit transition period, which expires at year-end and which maintains access to the EU's customs union and tariff-free single market, without a trade deal is also in the mix. The global economy should pick up recovery momentum in the months ahead as economies reopen, and cheap oil prices and massive stimulus measures should help the process.

    [USD, CHF]
    EUR-CHF was range bound in N.Y. trade on Wednesday, giving the cross a bit of breathing space from the March 9 five-year low. Hopes to end global lock down resulted in a risk-on session, allowing EUR-CHF to head to 1.0530 highs early, though the pair later eased back under 1.0515. 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 fell to 1.4115 lows after the North American open, down from overnight highs of 1.4238. The recent slide in oil prices took the pairing to near three-week highs of 1.4265 on Thursday, though some steadying in WTI crude near the $14.00 mark gave the CAD a modest lift. As for Canadian oil prices, Western Select crude settled in negative territory on Tuesday, resulting 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, with support at Tuesday's 1.4113 low.

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