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By XE Market Analysis July 8, 2020 2:53 pm
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    XE Market Analysis: Asia - Jul 08, 2020

    The Dollar was mostly lower in N.Y. on Wednesday, taking the DXY to better than two-week lows of 96.40 from early highs of 96.95. Risk-taking levels flipped from negative to positive early on, resulting in higher equities and yields. This again saw safe-haven flows out of the Dollar. Rising expectations for additional stimulus from Washington have perhaps softened the negative impact on sentiment from the rise in virus cases that is threatening the recovery. There was no market moving data today. EUR-USD rallied to 1.1352 highs from 1.1278 lows, while USD-JPY was range bound, falling from 107.61 to 107.24. USD-CAD pulled back to 1.3491 from early highs of 1.3599. GBP-USD based at 1.2529 early, later topping over 1.2620.

    [EUR, USD]
    EUR-USD printed intra day highs of 1.1296 in early N.Y. trade, up from London morning session lows of 1.1263. The modest move higher came as risk-taking levels improved, seeing U.S. equity futures flip modest losses to gains. Markets continue to look at the surge in COVID cases in the U.S. and globally, which can be expected to put an eventual cap on equities, and keep the safe-haven Dollar supported. Today though, stocks moved higher in morning trade, allowing EUR-USD to climb to 1.1352 highs, a three-week peak.

    [USD, JPY]
    USD-JPY again stuck to a narrow trading band, remaining inside of Tuesday's range, and meandering between 107.61 and 107.24. Demand for Yen and Dollars tends to rise during risk-off periods, while the opposite is true for risk-on conditions. Buying, or selling both currencies appears to have kept USD-JPY in check for the past week, which has seen the pairing manage a range of just 107.71 to 107.24 during that time period.

    [GBP, USD]
    Cable rallied over 1.2620 in N.Y., levels last seen on June 16.The move came following the UK government's detailing of fiscal support measures, which were dominated by measures to boost employment, including a big cut in sales tax for the reopening hospitality sector and a cut in the transaction tax for residential properties. The total worth of the package is about GBP 30 bln, which is about 1.5% of annual GDP. General unwinding of save-haven USD longs supported the pairing as well.

    [USD, CHF]
    EUR-CHF was again range bound in N.Y. on Wednesday, 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 slipped from early highs of 1.3599, later basing at 1.3491 in afternoon trade. The move came as risk-on conditions weighed generally on the USD, while WTI crude prices remained firm, both to the advantage of the CAD. Support comes at Tuesday's 1.3523 low. CAD traders will begin to shift focus to the Canada June jobs report on Friday, where we expect employment to increase by 700.0k, versus the 289.6k increase seen in May.

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