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By XE Market Analysis July 22, 2020 2:46 pm
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    XE Market Analysis: Asia - Jul 22, 2020

    Aside from USD-JPY, which rose modestly, the Dollar headed lower into the N.Y. open, and largely stayed down through the session. The DXY printed fresh four-plus month lows of 94.83. For data, U.S. existing home sales rebounded a record 20.7% to 4.720 in June following the -9.7% drop to 3.910 mln in May and the -17.8% April plunge to 4.330 mln. There was little market reaction to the about as-expected outcome. Wall Street was mixed overnight, as economic enthusiasm faded some given the rising pace of new COVID cases in the U.S., along with further heating up of U.S.-China frictions. EUR-USD rose to 1.601 highs, up from early lows of 1.1556. USD-JPY headed from 106.95 at the open, later topping at 107.22. USD-CAD briefly slipped under 1.3400, down from highs of 1.3453. GBP-USD meanwhile, recovered from opening lows near 1.2690 to highs of 1.2748.

    [EUR, USD]
    EUR-USD headed to levels last seen in October of 2018, topping at 1.1601 in early N.Y. trade, and up from overnight lows of 1.1507. The Euro has powered higher for four-straight sessions, helped by the EU coronavirus recovery fund agreement, while the Dollar has been under pressure as risk-on conditions remain in place. The next EUR-USD resistance level comes at 1.1630, which was the October, 2018 high.

    [USD, JPY]
    USD-JPY was on the move higher since the London morning session, coming from 106.88 lows ahead of the open, later climbing to 107.22 highs in late morning. The pairing remains inside of Tuesday's trading range, however, so today's session has not been part of a bigger breakout. Both the Dollar and Yen are seen as safe-haven currencies, and the two tend to offset one another during both risk-on and risk-off environments, limiting USD-JPY movement. Indeed, the pairing has been held inside a 106.50 to 107.50 trading band for over a week.

    [GBP, USD]
    Cable came under pressure ahead of the N.Y. open, reacting negatively to Brexit news. The pairing dropped by over 0.5% in pegging a two-day low at 1.2644, after the UK's Telegraph newspaper reported that the UK government is pessimistic about reaching a trade deal with the EU, just days before Prime Minister Johnston's end-of-July deadline for reaching a deal in principle. The FT concurrently reported, citing unnamed senior government officials, that the government has abandoned hopes for reaching a trade deal with the U.S. before the presidential election in November. GBP-USD later recovered to 1.2740 through the N.Y. session, as broad USD weakness set in.

    [USD, CHF]
    EUR-CHF pulled up just short of the 108.00 mark before falling back to near 107.50 in N.Y. on Wednesday. Recent general Euro strength has provided the cross support of late, though resistance at 1.0800 appears to be in place for now. The pairing had fallen back over the last few 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 fell to fresh one-plus month lows of 1.3398, down from overnight highs of 1.3480. The USD has come under broad pressure, seeing the Greenback fade against all major currencies but the risk-sensitive Yen this morning. Uncertainty over the ability of congress to pass another stimulus package, along with rising U.S. COVID cases, and fairly neutral risk taking levels have weighed on the USD. The CAD has managed to rally despite early weakness seen in oil prices, which saw WTI crude fall more than $1/bbl from Tuesday's trend high.

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