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By XE Market Analysis July 13, 2020 2:30 pm
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    XE Market Analysis: Asia - Jul 13, 2020

    The Dollar was mixed in N.Y. trade on Monday, falling versus Euro and Pound, while posting gains against the CAD and Yen. FX Trade was relatively quiet overall, and largely driven by the risk-on backdrop, following more good news on the COVID vaccine front, that Pfizer and BioNTech received fast track status from the FDA for development of two COVID vaccines. Wall Street was sharply higher on the report, while Treasury yields edged higher as well. EUR-USD rallied from opening lows near 1.1325 to 1.1375, while USD-JPY opened near 07.10, later printing 107.32 highs. USD-CAD faded to 1.3534 in early trade, down from over 1.3565, later bouncing to 1.3577. GBP-USD meanwhile, opened under 1.2595, later moving over 1.2635, then settling over 1.3600.

    [EUR, USD]
    EUR-USD headed to 1.1375 highs, with Dollar losses coming on the unwinding of safe-have USD flows, as risk taking levels surged. The pairing made its way from opening lows of 1.1324 following reports that Pfizer and BioNTech received fast track vaccine status from the FDA, which boosted Wall Street. From here, a breach of last Thursday's 1.1372 peak could open the door for a test of 1.1400, while support now sits at 1.1261, the 20-day moving average.

    [USD, JPY]
    USD-JPY firmed from Asian lows of 106.79, peaking in N.Y. trade at 107.32 as the risk-sensitive Yen is pressured by a surging Wall Street, where the NASDAQ printed fresh highs, and the S&P 500 moved to flat on the year-to-date. The pairing moved back above its 20-day moving average at 107.23, and will look to the 50-day moving average, currently at 107.43 as the next upside target. Friday's near three-week low of 106.64 is the next support level.

    [GBP, USD]
    Cable edged up from the opening lows at 1.2595, later peaking at 1.2639 before settling in near 1.2600. The Pound had been on the outperforming list of currencies over the last couple of weeks, with market narratives talking up the technical/momentum case for being bullish of the UK currency, with Cable's 200-day moving average at 1.2698 being highlighted as target by some. We're not too confident that the pound will continue higher this week. The latest round of trade negotiations between the UK and EU ended early for a second consecutive week due to "significant differences." Sterling is likely to be increasingly sensitive to news on this front into October, which is effectively the deadline on the process.

    [USD, CHF]
    EUR-CHF rallied to two-week highs of 1.0704, breaking above both its 20- and 50-day moving averages in the process. Another risk-on session helped the cross higher. The pairing 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 touched intra day lows of 1.3534 early in the North American session, down from Asian highs of 1.3602. A combination of risk-on conditions, along with relatively firm oil prices supported the CAD Through the morning session. WTI crude continues to trade on either side of the key $40 mark, though spiking COVID cases, along with OPEC+ plans to increase production at the end of the month, may ultimately weigh on oil prices, and the CAD. The pairing later topped at 1.3577. USD-CAD support is at the 200-day moving average at 1.3503, with resistance up at Friday's 1.3633 peak.

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