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By XE Market Analysis July 2, 2020 2:44 pm
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    XE Market Analysis: Asia - Jul 02, 2020

    The Dollar was choppy in N.Y. on Thursday, though ultimately ended up slightly on the session overall. It was a busy U.S. data day, headlined by the June employment report which saw non-farm payrolls surge 4.800 mln. Initial claims were somewhat disappointing, though factory orders surged more than expected. Wall Street and Treasury yields shot up on the data, though stocks and rates later pared gains on pre-long weekend profit taking and on caution over rising COVID cases. The DXY rallied to 97.34 from early lows of 96.85. EUR-USD ranged between just under 1.130 and 1.1234, ending near its lows. USD-JPY opened at 107.40, later rallying to 107.72 before steadying over 107.50. USD-CAD traveled a 1.3558 to 1.3623 band, closing near 1.3585, while GBP-USD peaked at 1.2529, later falling back to 1.2457 lows.

    [EUR, USD]
    EUR-USD peaked at 1.1298 immediately after the blowout U.S. jobs report, chopped around over 1.1250 through mid-morning before falling to 1.1234 lows into the London close. The failure to take out the 1.1300 level prompted EUR selling as position squaring set in early ahead of the long U.S. weekend. Risk-on conditions have recently seen the Dollar retreat as safe-haven flows reverse. On Thursday, the driver appeared to be book squaring more than the risk backdrop.

    [USD, JPY]
    USD-JPY rallied to 107.72 after the U.S. data, coming from 107.40 lows at the open, and after bouncing off its 107.35 50-day moving average in London morning trade. The stunning U.S. jobs report resulted in a stock market rally and higher Treasury yields, both supportive of USD-JPY. With the data slate now out of the way, the USD came off its best levels, bottoming at 107.46, likely as positions were squared up ahead of the long Independence Day long weekend in the U.S.

    [GBP, USD]
    Cable topped at 1.2529 after the U.S. employment report, before falling to 1.2480, rallying back to 1.2521, then dropping to 1.2457 into the London. There was little rhyme or reason to the choppy conditions, other than thin liquidity levels, though Sterling's last move lower was likely driven by book squaring into a long U.S. weekend.

    [USD, CHF]
    EUR-CHF was range bound in N.Y. on Thursday, After failing to hold the 1.07 mark overnight. Today's low was well above Friday's one-month low of 1.0623. The cross had fallen back over the last couple of weeks, though has continued to trade comfortably above the series of lows near 1.0500 that were seen from March through to mid May. Committed SNB intervention prevented the 1.0500 level from being breached over this period, when the consequences of the pandemic increasing bets about a possible breakup of the euro area, and even the EU. The SNB policy meeting was on Thursday, which stuck with negative rates for the foreseeable future and strengthened its commitment to intensify FX intervention if necessary to keep the CHF under control.

    [USD, CAD]
    USD-CAD dipped from near 1.3600 to session lows of 1.3562 after the 8:30 ET rounds of data. Canada May trade deficit narrowed more than expected, as exports rose 6.7% versus the ugly 29.7% contraction seen in May. Since then, the pairing rallied back above pre-data levels, largely driven by broad USD strength. Support is in place at 1.3560, representing the 20-day moving average.

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