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By XE Market Analysis February 24, 2020 2:52 pm
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    XE Market Analysis: Asia - Feb 24, 2020

    The Dollar was broadly lower in N.Y. on Monday, with losses coming despite the sharp risk-off backdrop due to the spike in non-China coronavirus cases. Profit taking was a feature after thee DXY was unable to test the 100.0 mark seen last week, and as EUR-USD failed to trade below the trend lows seen last week. There was nothing in the way of market moving data. EUR-USD rallied over 1.0870 from lows under 1.0815, as rusk-sensitive USD-JPY slipped under 110.40. USD-CAD dipped under 1.3255 from near 1.3295, while Cable headed toward 1.2940 from just under 1.2900.

    [EUR, USD]
    EUR-USD headed over 1.0870 highs, marking an eight-session top, coming from early lows of 1.0813. The move higher has been put down to position adjustments following the pairing's failure to test the trend lows seen last week. The coronavirus outbreak in Italy will be watched closely, and will likely see the Euro come quickly back under pressure should the virus spread more broadly throughout Europe. Next resistance is at the February 13 high of 1.0890, with support at last Thursday's 1.0777 low.

    [USD, JPY]
    USD-JPY was down sharply from overnight highs of 111.68, dropping to lows under 110.40 in afternoon N.Y. trade. Coronavirus fears have resulted in a huge slide in risk taking levels, leaving major U.S. equity indices down better than 3%. In the scheme of things however, given risk-off conditions, and heightened coronavirus concerns, USD-JPY has held up relatively well. There was talk last week of early portfolio flows into the Dollar ahead of Japan's fiscal year end on March 31, with pension funds rumored to have been big buyers. These flows may continue, and despite the current risk averse conditions, may limit USD-JPY downside for now.

    [GBP, USD]
    Cable fell to 1.2887 lows into the N.Y. open, down from near 1.2955 in London. The currency's underperformance came with UK Prime Minister Johnson reaffirming today that he is prepared to walk away from the table if upcoming trade talks don't go his way. Johnson is wanting both a free trade agreement with the EU at the same time as regulatory divergence from the Union, which he sees as necessary to "restore independence," and this to be agreed in time for a January 1st 2021 implementation. A Reuters poll last week 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. A lack of deal will likely keep pressure on the Pound.

    [USD, CHF]
    EUR-CHF bounced slightly on Monday, topping at 1.0626, after falling to 1.0588, levels last seen in August of 2015.. The cross had touched new trend lows of 1.0604 last week. 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 rallied to two-week highs of 1.3308 in London morning trade, up from Friday's 1.3224 close. The coronavirus related plunge in oil prices supported the pairing, though with WTI crude off its lows, and a stronger Canada wholesale trade print in the books, USD-CAD has edged back to lows under 1.3255. With sharp risk-off conditions in place on Monday, further downside was contained through the remainder of the session.

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