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By XE Market Analysis July 9, 2020 3:54 pm
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    XE Market Analysis: Asia - Jul 09, 2020

    The Dollar got a boost in the wake of the SCOTUS ruling on Vance v Trump, allowing the New York grand jury to have access to President Trump's tax returns and other financial records. The USD had been trending lower ahead of the ruling, as modest risk-on conditions were in place. The backdrop quickly turned to risk-off though, with the news taking stocks and yields sharply lower, and the DXY to 96.79 highs from 96.32 on the back of safe-haven buying. Incoming data had jobless claims which were near expectations, and had little market impact. EUR-USD fell from 1.1349 to 1.1286, while USD-JPY rallied from 107.11 to 107.35. USD-CAD headed to 1.3576 peak from early lows of 1.3496. GBP-USD fell from 1.2661 highs to 1.2601 lows.

    [EUR, USD]
    EUR-USD was steady early in the N.Y. session, ranging between 1.1349 and 1.1322. The jobless claims print, which was close to expectations had little impact, but the SCOTUS ruling on Trump taxes to the grand jury lifted the Dollar broadly, as a flight to safety set in. EUR-USD fell from near 1.1330 to session lows of 1.1286. With virus cases spiking in the U.S., there remains potential for an increasing number of risk-off sessions going forward. Should this be the case, safe-haven USD buying is likely to keep pressure on EUR-USD.

    [USD, JPY]
    USD-JPY rallied modestly following the SCOTUS/Trump news, taking the pairing from near two-week lows of 107.11 to 107.35 highs. The Dollar had peaked at 107.41 (50-day moving average) into the open, though sold off to lows after failing to break above the 50-dma. With both the Dollar and Yen seen as safe-haven currencies, USD-JPY ranges have been relatively narrow over the past two-weeks or so, as buying or selling of both currencies keeps trading bands compressed. Resistance remains at 107.41, with support at the June 29 low of 107.04.

    [GBP, USD]
    Cable posted an over three-week high of 1.2669 in early N.Y. trade. Market narratives are talking up the technical/momentum case for being bullish, with Cable's 200-day moving average at 1.2698 being highlighted as target by some. On the bullish side of the equation, there have been signs that both the UK and EU are committed to reaching a trade deal, along with the UK government's detailing of fiscal support measures yesterday, which while as expected in magnitude, at GBP 30 bln, were dominated by measures to boost employment. GBP-USD later fell back to 1.2601 following the SCOTUS/Trump ruling.

    [USD, CHF]
    EUR-CHF was again range bound in N.Y. on Thursday, 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 had been steady overnight and in early North America, touching a near three-week low of 1.3489 into the open. Steady oil prices, near recent highs provided support to the CAD. Buying was reported early on under the 200-day moving average which sits at 1.3500, though it was the SCOTUS ruling on Trump taxes that turned modest risk-on conditions into full-bore risk-off that had the impact, seeing equities tank, yields fall, and WTI crude prices to tumble nearly $1.50/bbl. This resulted in USD-CAD spiking up to 1.3585 from near 1.3510. The pairing briefly edged over its 20-day moving average at 1.3587, and has since eased back to 1.3575. Support now is at 1.3500 with resistance at 1.3600.

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