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By XE Market Analysis February 10, 2020 3:02 pm
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    XE Market Analysis: Asia - Feb 10, 2020

    The Dollar was mostly firmer in N.Y. trade on Monday, taking the DXY to fresh trend highs of 98.88, levels last seen on October 10. There was no incoming data to move the market, though last Friday's strong employment report continued to resonate with FX traders. EUR-USD fell to four-plus month lows of 1.0909, from opening levels near 1.0950. USD-JPY struggled to rally, ranging between 109.79 and 109.64. USD-CAD printed four-month highs of 1.3329 with weak oil prices supporting. Cable rallied yo 1.2946 in early trade, later pulling back to 1.2907 lows. Wall Street managed modest gains, while Treasury yields were a bit lower.

    [EUR, USD]
    EUR-USD posted new four-plus month lows of 1.0909 into the London close, down from opening highs of 1.0953. Some of the pairing's decline was attributed to Trump comments, who said to the effect, that Europe has treated the U.S. badly, perhaps indicating his focus will shift to the continent with regards to trade. Political jitters in Germany helped the Euro as well. The unexpected withdrawal of Merkel's designated successor has not just thrown the leadership race wide open again, it also added to risk that the uneasy coalition government in Berlin won't last the full term. In addition, strong U.S. data, coupled with much weaker recent EUR production figures, will likely keep EUR-USD's forward path to the downside.

    [USD, JPY]
    USD-JPY printed 109.64 lows during afternoon N.Y. session, coming from Asian session highs of 109.88. Wall Street turned opening losses into gains, which saw the risk-sensitive pairing bounce to 109.79 highs. Coronavirus concerns will likely limit USD-JPY upside potential going forward, as the outbreak continues to spread in China, and indeed around the world. Last week's 110.03 high is seen as the next resistance level, with support at the 20-day moving average of 109.54.

    [GBP, USD]
    Cable was lifted above 1.2945 in early N.Y, after earlier posting a 10-week low at 1.2872. The gains came despite the UK declaring a "serious and imminent threat" to public health following a rise in UK coronavirus cases, and with the Telegraph reporting "fundamental differences" in post-Brexit fishing rights, which could be a major source of friction on the trade front. On the positive side of the coin, the BoE's recent refrain from easing and data showing a release of pent-up business decision making and spending following the December election have been helping prop up the UK currency. The U.K. government has been signaling divergence from the EU, while the U.S. has been threatening the UK that its decision allow Huawei to participate in building 5g infrastructure may come at the cost of a good trade deal.

    [USD, CHF]
    EUR-CHF a trend low of 1.0659 in N.Y. trade on Monday. Concerns about contagion of the coronavirus have been affecting market sentiment across the world. With no signs of slowing, and the death toll rising, particularly in China, the Franc's safe-haven status remains in effect. Lows of 1.0627, seen in February of 1027 is the next downside target.

    [USD, CAD]
    USD-CAD rallied to levels last seen on October 10, peaking at 1.3329 in early North American trade. The move from opening highs near 1.3300 comes as WTI crude slips to $49.75 lows from over $50.35. Risk-off conditions are developing this morning, which has been supportive of the pairing as well. The October high of 1.3349 becomes the next upside target, with a break there taking USD-CAD to five-plus month highs.

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