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By XE Market Analysis February 12, 2021 2:38 pm
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    XE Market Analysis: Asia - Feb 12, 2021

    The Dollar firmed in early trade on Friday, seeing the DXY hit four-session highs of 90.74. Gains were short lived however, as selling stepped in at mid-morning, leaving the USD index at 90.38 lows after the London close. Following losses seen this week, the USD appears to be entering a consolidative period, managing to close out the week above its lows. The U.S. economic recovery will largely depend on the pace of Covid vaccinations, which will determine how long that takes. Uncertainty remains however, and a bumpy rebound may be in store, leaving USD direction going forward a bit up in the air. The miss in Friday's consumer sentiment index, along with disappointing jobless claims seen Thursday, perhaps saw traders leaning toward selling the Greenback into a long holiday weekend.

    [EUR, USD]
    EUR-USD rallied from early lows of 1.2082, topping at 1.2129 after the London close. Overnight USD buying turned into selling in morning trade, likely partly due to position squaring into a long U.S. weekend, though uncertainty of economic recovery both here and in the EU should keep Dollar direction a two-way risk for the time being. EUR-USD ends near highs of the week, though has largely been in consolidation mode since Wednesday..

    [USD, JPY]
    USD-JPY rallied to four-session high of 105.18 in London morning trade, before fading some into the N.Y. open, and eventually topping at 105.12 before heading to 104.91 lows, as the USD generally gave up ground into the long weekend. The extension of Covid restrictions announced overnight weighed on the yen, though uncertainty over the recovery of the U.S. economy had traders paring long USD positions into the weekend.

    [GBP, USD]
    Cable recovered to within a hair of Wednesday's trend high of 1.3866, topping at 1.3861 after the London close on Friday. The pairing had opened the session at 1.3776. Dollar weakness supported on Friday, though the UK's speedy and smooth vaccine operation, which is coming close to having vaccinated 25% of the adult population, including almost the entirety of the most vulnerable groups, has been Sterling positive. The UK may be ahead of the curve in reopening its domestic economy, even if tight international travel restrictions look likely remain in place for some time.

    [USD, CHF]
    The SNB maintained policy settings in December and reaffirmed once again that it will use direct intervention on currency markets to keep a lid on the "highly valued" currency, despite the fact that the U.S. now official labels Switzerland as currency manipulator. There was no real surprise in the statement, with the central bank highlighting that Covid-19 is "continuing to have a strong adverse effect on the economy". The bank expects consumer prices to fall sharply this year and to stay around zero over the next two years, also thanks to a strong CHF. To start the year, EUR-CHF pulled back under the 1.0800 level, which had provided good support for much of December. The cross dipped to near two-week lows of 1.0787 in N.Y. on Wednesday, as risk taking levels pulled back, though managed to dold the 1.08 handle in N.Y. on Friday.

    [USD, CAD]
    USD-CAD hit four-session highs of 1.2763 in early North American trade, as oil prices languished under $58.00, and the USD showed broad signs of recovery. Since then, USD-CAD has pulled back to 1.2680, as the DXY reversed course lower, touching an intra day bottom. In addition, WTI crude rallied to fresh 13-month highs of $59.81, up from near $57.80 at the open. USD-CAD support now comes at Thursday's low of 1.2661.

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