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By XE Market Analysis July 23, 2020 2:47 pm
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    XE Market Analysis: Asia - Jul 23, 2020

    The DXY fell to levels last seen in September of 2018 in N.Y. on Thursday, as virus fears become heightened, and sentiment on U.S. growth going forward continues to slip. Today's jobless claims were quite a bit higher than forecasts, which dented the Dollar, weighed heavily on stocks, and pressured Treasury yields. It will take more than a day to determine, though it is possible the Greenback may be losing some of its safe-haven appeal, as an uncertain economic outlook weighs. EUR-USD rallied to trend highs of 1.1627, from early lows of 1.1541. USD-JPY dipped to 106.79 from 107.24. USD-CAD was choppy, falling to one-month lows of 1.3349 from over 1.3425, that rallying back to 1.3410. GBP-USD rallied from under 1.2675 to 1.2760 highs.

    [EUR, USD]
    EUR-USD printed fresh 21-month highs of 1.1627 into the London close, up from early lows of 1.1541. The pairing has been supported both by broader dollar weakness, coming this week from heightened concerns over the spike in COVID cases and broader euro outperformance since the EU agreed to the pandemic relief fund. A downside risk for EUR-USD would be any rekindling in sustained risk aversion in global markets, which would likely generate safe haven demand for dollars.

    [USD, JPY]
    USD-JPY has printed another inside day, falling from 107.24 highs seen early in the session, and 106.79 lows after the London close. Rising COVID cases in the U.S. has seen the USD generally under pressure this week, though 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 the past two weeks.

    [GBP, USD]
    Cable eased to 1.2673 lows in early N.Y., down from overnight highs of 1.2753, as the latest round of UK-EU trade talks ended without breakthrough, with both sides reporting that major differences remain on key issues. The UK's chief negotiator David Frost said that it's now clear that a deal in principle won't be reached by the end of July. Later in the session, general USD weakness allowed GBP-USD to rally to highs of 1.2760, though with the possibility of a no-deal exit from the single market hanging in the air, the Pound's upside potential is likely to remain muted.

    [USD, CHF]
    EUR-CHF continued to trade on either side of its 1.0730 200-day moving average on Thursday. Recent general Euro strength has provided the cross support, 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 was lifted from one-month lows of 1.3369 seen in London morning trade, to 1.3427 highs in early North America. Trade was choppy after that, resulting in another push lower to 1.3349, then a rally toward 1.3395. Lower oil prices along with a modest risk-off backdrop saw the CAD give back some of recent gains in afternoon trade. Oil prices and risk taking levels continue to drive USD-CAD direction. USD-CAD support is now at the June 10 low of 1.3313, with resistance at the 200-day moving average at 1.3514.

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