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By XE Market Analysis April 29, 2020 3:17 pm
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    XE Market Analysis: Asia - Apr 29, 2020

    The Dollar attempted to rally early in the N.Y. session on Wednesday, though later eased on the back of a weaker Q1 GDP report, and as risk-on conditions prevailed following reports that Gildead's remdesivir virus drug had potential against the pandemic. Wall Street rallied sharply on the news. The dollar held steady following the FOMC announcement, where policy was left unchanged, as widely expected. The statement said "The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals". EUR-USD was steady just under 1.0850, after ranging between 1.0862 and 1.0842, while USD-JPY idled just under 107.70, after topping at 106.72, and basing at 106.47 at the open. USD-CAD slipped to 1.3912 lows, as oil prices ran up as much as 30%. Cable rallied from 1.2383 to 1.2451, later settling near 1.2430.

    [EUR, USD]
    EUR-USD eased from early highs of 1.0868, later bottoming at 1.0843 as risk-on conditions prevailed following news that a NIAID study showed positive results for Gilead Science's remdesivir coronavirus drug. The pairing subsequently steadied inside of 1.0845-60. The FOMC announcement, which was as-expected had little impact on the pairing, and the ECB's on Thursday will not likely impact EUR-USD much impact either, as both banks are in full bore ease mode, and will likely remain that way for some time.

    [USD, JPY]
    USD-JPY recovered some from the six-week low of 106.36 seen in London morning trade, peaking at 106.76 following the report that Gilead Science's Remdesivir coronavirus drug may help tame the pandemic. The pairing has since idled inside of 106.70 to 106.50. Risk-on conditions will likely limit USD-JPY downside for today, though the Fed's massive stimulus, including rate cuts to near zero have seen some Yen repatriation since the start of April. Ultra loose U.S. monetary policy can be expected to keep the USD under pressure going forward, which could bring the key USD-JPY 100.00 level into focus.

    [GBP, USD]
    Cable lifted to a 1.2451 in early N.Y. on the back of general USD weakness. The pairing later bottomed at 1.2410, before steadying on either side of 1.2430. With the global rate of coronavirus infection in decline, and major economies starting a phased reopening (and while the UK remains in lock down, the UK Treasury is reportedly drawing up measures to "get Britain back to work"), the tide looks to be shifting, though this assumes that the reopening can be done without causing a second wave of infections. This backdrop should help support the pound, though the continued risk for the UK leaving the post-Brexit transition membership of the EU's single market at the end of the year should curtail upside potential.

    [USD, CHF]
    EUR-CHF traded through its 50-day moving average, on its way to April highs of 1.0611 on Wednesday, as risk-taking levels soared. 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 has printed better than two-week lows of 1.3912, down from early Asian session highs of 1.4003. The move lower came on the back of the 25% rally in WTI crude prices, and the overall risk-on backdrop, which came on news that a NIAID study showed positive results for Gilead Science's remdesivir coronavirus drug. The pairing later bounced modestly over 1.3940. Support now comes at 1.3905, which represents the 50-day moving average.

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