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By XE Market Analysis July 7, 2020 2:51 pm
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    XE Market Analysis: Asia - Jul 07, 2020

    The Dollar was choppy, but little changed overall in N.Y. trade on Tuesday, generally reacting to the risk backdrop. There was no data to move markets, though Wall Street posted losses as investors have a rethink, at least for now, on the economic growth outlook, as COVID hot spots continue to slow reopenings around the world. The DXY ranged between 96.97 and 96.75. EUR-USD topped at 1.1307 early, eased to 1.1272, then later recovered to 1.1303. USD-JPY headed to 107.50 lows from early highs of 107.72. USD-CAD opened at 1.3558 lows, subsequently making its way to 1.3604 before steadying near 1.3580. GBP-USD rallied from near 1.2515 to 1.2592 highs.

    [EUR, USD]
    EUR-USD posted an inside day on Tuesday, finding support in the London morning session at its 20-day moving average of 1.1260, and peaking at 1.1307 in early N.Y. trade. Risk-off overnight had supported the USD into the open, though the Dollar turned lower through mid-morning, as the risk backdrop improved. A round of position squaring subsequently saw EUR-USD head to 1.1272 lows, though buyers again returned, taking the Euro back over 1.1300.

    [USD, JPY]
    USD-JPY pulled back slightly from its one-week high of 107.80, touching 107.60 lows in early N.Y. trade. The pairing bottomed at 107.25 in Asia, just above its 20-day moving average. The Dollar had been bid though the overnight session, as risk-off conditions returned. Since then, Wall Street pared losses, while the NASDAQ has turned positive, allowing USD-JPY to retreat some, later bottoming at 107.50

    [GBP, USD]
    Cable headed higher in N.Y. trade, with sterling helped by confirmation that UK-EU trade discussions will continue throughout July, and then recommence in the week of August 17th following the summer recess, along with some speculation that the two sides might make a political declaration of intent before the end of the month. The UK government will also be presenting a budget update tomorrow, where a range of targeted measures to tackle rising unemployment are expected. These factors have for now offset negative leads, including reports that the BoE has been talking with commercial banks to prepare them for the possibility of negative interest rates.

    [USD, CHF]
    EUR-CHF was again range bound in N.Y. on Tuesday, trading in the lower to mid-1.06s for a week now. The cross had fallen back over the last few 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. SNB policy, 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 printed four-session highs of 1.3589 in London morning trade, up from Asian session lows of 1.3523. The pairing headed back up to 1.3587 into the North American open, meandered near 1.3575 through the morning, later topping at 1.3604. Softer oil prices along with today's risk-off backdrop put a floor under USD-CAD, though overall, it remains inside of recent ranges. Support is at the 200-day moving average at 1.3498, with resistance up at the July 2 high of 1.3635.

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