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By XE Market Analysis July 14, 2020 2:32 pm
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    XE Market Analysis: Asia - Jul 14, 2020

    The Dollar was slightly lower overall on Tuesday in N.Y., though trading ranges were generally narrow. A warmer than expected June CPI print had little impact on markets. Wall Street was choppy, though ultimately found a footing in positive territory on some better than expected earnings from JP Morgan and Citigroup, while Treasury yields were slightly lower. EUR-USD based at 1.1361 in early trade, later peaking at 1.1406. USD-JPY eased to 107.17 lows, down from 107.43 at the open. USD-CAD chopped between 1.3636 and 1.3595, while GBP-USD rallied from 1.2480 to highs of 1.2560 after the London close.

    [EUR, USD]
    EUR-USD bounced from early lows of 1.1361, trading up to 1.1409, levels last seen on June 10. The 1.14 handle has been a tricky level for the pairing over the past month, providing solid resistance, though a close above the level today may result in some follow through buying. Going forward, risk-taking levels will likely continue to drive EUR-USD direction, as the Dollar remains a haven currency, though with the pandemic recovery likely to have ups and downs, two-way risk remains for the pairing.

    [USD, JPY]
    USD-JPY has been range bound through the session, managing just a 107.43 to 107.17 trading band since the open. A mixed risk backdrop has seen the pairing put in its narrowest range in quite a while, and more of the same can be expected until a clearer picture of the pandemic and the economy can be gleaned. For now, resistance is at the 50-day moving average, currently at 107.44, with support at the overnight Asian low of 107.12.

    [GBP, USD]
    Cable eased ahead of the N.Y. open as U.K. May GDP figure, which showed 1.8% m/m growth versus a median forecast for 5.5%. In addition, the independent Office for Budget Responsibility forecast UK GDP shrinking by 10% in 2020. The pairing based at 1.2480 (its 20-day moving average) in early N.Y, later making its way to 1.2556 highs as the USD came under modest pressure. U.K. and EU trade discussions have not gone well so far, suggesting that the two sides are unlikely to agree anything but a narrow trade deal.

    [USD, CHF]
    EUR-CHF rallied to three-week highs of 1.07010, 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 eased back from early highs of 1.3636, touching 1.3595 lows. The modest move lower came as WTI crude rallied over $1/bbl, back over the $40 level, providing some support to the CAD. Overnight, the pairing touched a two-week high of 1.3647. The mixed risk backdrop through the morning subsequently limited further USD-CAD downside. Initial support comes at the 20-day moving average at 1.3590, with resistance up at the overnight high. USD-CAD is likely to turn sideways into Wednesday's BoC policy announcement.

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