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By XE Market Analysis April 27, 2020 2:45 pm
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    XE Market Analysis: Asia - Apr 27, 2020

    After falling to one-week lows of 99.83 overnight, the DXY headed modestly higher to 100.18 through the N.Y. morning session. As has been the case of late, trading ranges were narrow relative to the wild swings seen in March. There was no noteworthy data on tap Monday. Wall Street rallied, with gains coming on the back of partial economic re-openings in some states. The major indices were up better than 1%. Treasury yields rose as well. The FOMC meeting kicks off on Tuesday, with the policy announcement due Wednesday. Given all the heavy-lifting seen from the Fed with regards to the pandemic, the FOMC is expected on hold. EUR-USD dipped to 1.0817 from 2.0860 highs, as USD-JPY rallied out of 106.99 lows to 107.35. USD-CAD topped over 1.4080, later easing to 1.4031 lows. Cable opened at 1.2445, later falling to 1.2399.

    [EUR, USD]
    EUR-USD headed from four-session highs of 1.0860 seen ahead of the N.Y. open, to a 1.0817 low into the London close. Trade was relatively light, with the pairing overall remaining inside a well worn trading band for the past week or so. Wednesday's FOMC announcement and Thursday's ECB announcement are not expected to have much FX impact, with the former seen on hold following the huge policy moves already made, and the later widely expected to shift its debt purchases to include junk paper.

    [USD, JPY]
    USD-JPY was lifted to 107.35 highs, after falling to near two-week lows of 106.99 earlier in the session. The pairing slipped from 107.55 to 107.30 in the immediate aftermath of the expected BoJ decision to make JGB purchases unlimited, while increasing its buying of corporate bonds and commercial paper, though a generally perkier Dollar subsequently limited downside. The April 15 low of 106.93 is support now, with resistance at Friday's high of 107.76.

    [GBP, USD]
    Cable headed from opening highs of 1.2445 to late morning lows of 1.2399. The pair posted a one-week high at 1.2455, just ahead of the London inter bank open. The pound was supported in London morning trade by Prime Minister Johnson's return to work after recovering from his brush with Covid-19, and, while Johnson said that it was still too early to ease the lock down, the UK Treasury is reportedly drawing up measures to "get Britain back to work," including plans for "Covid-secure offices." With the global rate of coronavirus infection growth declining, and major economies starting a phased reopening, the tide looks to be shifting, for now. This backdrop should help support the pound.

    [USD, CHF]
    EUR-CHF traded through its 20-day moving average, on its way to near three-week highs of 1.0570 on Monday, as risk-on conditions prevailed.The SNB has successfully been putting a cap on the franc, which has seen EUR-CHF in recent weeks skirt along just above the five-year low that was first seen on March 9th at 1.0505 without breaching it. Weekly sight deposit data out of Switzerland has pointed to the extent of SNB franc selling over the pandemic crisis period, which was most acute in March before basing out as global governments and central banks acted with interventions and stimulus packages.

    [USD, CAD]
    USD-CAD eased from overnight highs of 1.4112, basing at 1.4040 in London morning trade, since bouncing over 1.4080 in early North America. Risk-on conditions kept USD gains hemmed in generally, though another 25-plus percent drop in WTI crude limited USD-CAD's downside potential. On a positive note, the Western Canadian Select grade of crude is reportedly trading over $6/bbl, a vast improvement from the negative numbers seen for a couple of days last week. The pairing later bottomed at 1.4031 as crude bounced. Big picture, oil prices will continue to drive USD-CAD direction.

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