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By XE Market Analysis April 23, 2020 2:40 pm
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    XE Market Analysis: Asia - Apr 23, 2020

    The Dollar index fell through the morning as risk-on conditions prevailed, later rallying as Wall Street gave back the bulk of early gains. The DXY bottomed at 100.06, from 100.63 before peaking at 100.57. Jobless claims rose another 4.2 mln, but had little market impact. New home sales fell in line with expectations has were largely looked through as well. Wall Street posted solid gains in morning trade,as optimism that the worst of the pandemic may be approaching, and hopes to re-open parts of the economy had driven early gains. These were largely given back following a report that a China trial of Gilead's anti-viral Remdesivir drug ended in failure. EUR-USD rallied to 1.0845 from under 1.0765 at the open, later falling back toward 1.0760. USD-JPY topped at 108.04 on reports the BoJ will discuss buying more bonds, later bottoming at 107.40. USD-CAD pulled back to near 1.4000 from over 1.4250, as oil prices rallied, while Cable pulled back from highs of 1.2415 to under 1.2335.

    [EUR, USD]
    EUR-USD took an overnight hit following horrible preliminary April PMIs. The manufacturing sector outperformed, but the reading dropped to 33.6 from 44.5 in March. The services sector collapsed to 11.7 from 26.4. The hospitality and tourism sectors in particular were hit and for tourism in particular there will be little chance of a quick recovery. EUR-USD fell from near 1.0835 to near one-month lows of 1.0756 into the N.Y. open. In N.Y. the pairing rallied back over 1.0845, later falling under 1.0775 as Wall Street gave back the bulk of early gains.

    [USD, JPY]
    USD-JPY spiked to highs of 108.04 from 107.40 on a report from Nikkei news saying the BoJ is to discuss unlimited bond buying at the next meeting, including doubling the purchases of corporate bonds. USD-JPY has been in consolidation mode for a week now, and will need to move above last Friday's 108.08 high to shift sentiment. USD-JPY later faded to 107.40 lows.

    [GBP, USD]
    Cable topped at 1.2415 in early N.Y. trade, with risk-on conditions supporting. The buyers stepped back into the London close, and as Wall Street pared heavy early gains, the Pound traded to 1.2335 lows. is moderately higher on the day, though has remained within its Wednesday range. The pound and UK markets showed little reaction to the dismal UK PMI data, which were widely expected. The UK preliminary April composite PMI plummeted to a reading of just 12.9, down from 36.0 in March.

    [USD, CHF]
    EUR-CHF was range bound in N.Y. trade again on Thursday, 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 closed near 1.4160 on Wednesday, opening the session near 1.4150. The recent surge in WTI crude has limited USD-CAD upside, though as the Western Canadian Select grade of domestic crude remained priced in negative territory, the CAD had trouble rallying, finding support above the 1.4100 mark for three-days running. Later, USD-CAD broke lower, with the Loonie aided by a 30% rally in WTI crude, and Western Canadian Select heavy crude prices said to be back in positive territory, at over $8/bbl after two sessions under zero. The pairing printed lows of 1.4001 into mid-session.

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