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By XE Market Analysis February 12, 2020 3:05 pm
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    XE Market Analysis: Asia - Feb 12, 2020

    After stumbling some on Tuesday, the Dollar index headed to fresh four-month highs in N.Y. trade on Wednesday. The USD remains firm, largely due to an outperforming U.S. economy. Risk-on conditions prevailed through the session, taking major U.S. equity indices to or near record highs. Wall Street gains came with mostly better earnings reports, along with an apparent slowing in new coronavirus cases in China. There was no data to move markets. EUR-USD fell to 33-month lows of 1.0876, after opening near 1.0915. USD-JPY printed three-week highs of 110.14 in London, and remained stuck between 109.95 and 110.08 through the session. USD-CAD bucked the trend, falling to 1.3235 as oil prices rallied. GBP-USD steadied over 1.2960 after falling to 1.2954 early in the session.

    [EUR, USD]
    EUR-USD printed 1.0876 lows, levels not seen since May of 2017. Wednesday marks the seventh straight session of lower daily lows. The outperforming U.S. economy continues to drive the pairing lower, while in Europe, political angst in Germany, weak incoming data, along with concerns over trade negotiations with both the U.K. and the U.S. has weighed on the Euro. This, along with a softer European economic outlook should see further EUR-USD losses in the cards.

    [USD, JPY]
    USD-JPY posted three-week highs of 110.14 in London morning trade, following reports that new coronavirus cases are slowing in China. The pairing later eased to 109.90 lows, and has traded as high as 110.09 in N.Y. dealings. Risk-on has been a feature through the session, with equity and commodity gains supporting USD-JPY, as virus fears abate to a degree. This said, many unknowns remain, and USD-JPY bulls will remain cautious.

    [GBP, USD]
    Cable settled lower, after having been dragged down by declines in EUR-USD amid broader dollar firmness. The pair dipped to 1.2954 lows, later steadying above 1.2060. Available January data out of the UK have shown a rebound in economic activity as the fog of political uncertainty cleared following the December general election, while Prime Minister Johnson yesterday announced big plans for infrastructure projects (increasing expectations for the government's 2020-21 budget, to be detailed in March, to show a significant expansion in fiscal boost). These have helped quell, for now, concerns about Brexit and divergence from the EU.

    [USD, CHF]
    EUR-CHF made another trend low of 1.0630 in N.Y. trade on Wednesday. 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. A multi-year low in EUR-USD weighed on the cross as well. Lows of 1.0627, seen in February of 2017 is the next downside target.

    [USD, CAD]
    USD-CAD printed eight session lows of 1.3235, down from overnight highs of 1.3296. A 3% rise in oil prices weighed the pairing down, while general risk-on conditions have supported the CAD as well. Reports that new coronavirus cases are slowing has reduced market angst to a degree, allowing equities and riskier assets to rally. The next major USD-CAD support level comes at 1.3221, representing the 200-day moving average.

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