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By XE Market Analysis February 21, 2020 2:49 pm
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    XE Market Analysis: Asia - Feb 21, 2020

    The USD took a hit in N.Y. trade on Friday, with the Dollar index falling to a four-session low after much weaker manufacturing and services PMIs. The DXY fell to 99.24, after opening at 99.75. The data knocked stock indices lower, sending cash scrambling into Treasuries, where yields were pressured. EUR-USD traded to highs over 1.0860, from opening lows just under 1.0800. USD-JPY fell to 111.50 from near 1.1200 as risk-off conditions were sustained. USD-CAD fell from 1.3264 to February lows of 1.3200, despite softer Canada retail sales. Cable meanwhile, rallied to near 1.2980 from 1.2925 seen at the open.

    [EUR, USD]
    EUR-USD has headed up to levels last seen on Monday, and appears to have broken its string of 13-straight lower daily lows. The pairing bounced from lows of 1.0786 at the close on Thursday, to a 1.0860 top in N.Y. on Friday. Pre-weekend short covering appeared to have been the driver of the modest rally, getting its start from better European PMI data, and then later, by weaker U.S. manufacturing and services PMI data. EUR-USD resistance is now seen at the 1.0850-60 level.

    [USD, JPY]
    USD-JPY was off of pre-open highs of 112.04, trading to 111.50 lows. The downdraft in U.S. PMIs, and subsequent Wall Street sell off, and dive in Treasury yields has weighed on the pairing. In the scheme of things however, given risk-off conditions, and heightened coronavirus concerns, USD-JPY remains not far below the nine-month highs seen on Thursday. There has been chatter lately of early portfolio flows into the Dollar ahead of Japan's fiscal year end on March 31, with pension funds rumored to be behind the move. These flows may continue, and despite the current risk averse conditions, may allow USD-JPY to continue higher.

    [GBP, USD]
    The Pound has posted two-day highs versus the Dollar in N.Y. on Friday. UK PMI data beat expectations, while later, U.S. PMIs were much weaker than expected. Sterling has been buoyed somewhat by a post-election boost in economic activity in the UK, but the government's course for divergence from the EU in post-Brexit trade negotiations remains a concern. A Reuters poll found two thirds of economists questioned are expecting the UK to strike a goods-only trade deal with the EU, and for the Brexit transition period to not be extended.

    [USD, CHF]
    EUR-CHF bounced slightly on Friday, topping at 1.0626 as EUR-USD rallied. The cross had touched new trend lows of 1.0604 on Thursday. The pronounced losses the cross has been seeing are partly a product of safe-haven demand for the franc, and partly as a lasting consequence of the surprising decision by the U.S. to add Switzerland to its list of currency manipulators last month.

    [USD, CAD]
    USD-CAD was steady early in the session, shrugging off the Canada retail sales outcome, which overall was a bit softer than expected. The pairing idled between 1.3254 and 1.3264 into the U.S. manufacturing and services PMIs, then fell to near lows of the week at 1.3210 as the PMIs disappointed in a big way. A pullback in oil prices has limited USD-CAD downside potential since then, with WTI crude down nearly 1.5% on the session.

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