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By XE Market Analysis June 4, 2020 3:06 pm
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    XE Market Analysis: Asia - Jun 04, 2020

    Thursday was another rough day for the Dollar, as the DXY slipped to new near three-month lows of 96.60, down from opening highs of 97.54. The main driver of USD weakness remains the discounting of the Greenback's save-haven premium. Higher than consensus weekly jobless claims, along with a wider April trade deficit had only limited impact. Wall Street was mixed, while Treasury yields headed higher again. The ECB ramping up of stimulus at today's meeting saw the Euro outperform, seeing EUR-USD up over 1.1350. USD-JPY remained firm, as Yen weakness has prevailed given the generally risk-on conditions seen of late. USD-CAD was choppy, trading inside at 1.3466 to 1.3541 band. GBP-USD touched one-month highs of 1.2624. Friday brings the May employment report, where non-darm payrolls are seen falling by 2.000 mln.

    [EUR, USD]
    EUR-USD spiked higher after the ECB ramped up its stimulus package, increasing its bond purchases by EUR 600 bln to a total of EUR 1.35 tln. The pairing initially rallied from near 1.1200 to highs of 1.1272, since falling back to 1.1220, then rebounding to fresh three-month highs of 1.1362 as Wall Street cuts initial losses. The pairing pulled back slightly into the London close as modest profit takings set in, seeing the EUR dip to 1.1313 lows. Initial resistance is at the March 11 top of 1.1368. Ongoing risk-on conditions will continue to see the Dollar's safe-haven premium unwind.

    [USD, JPY]
    USD-JPY topped at two-month highs of 109.17 in London morning trade, later falling back to 108.62 lows after the early round of U.S. data. Since then, the pairing has perked up again, later rallying back over 109.10 as the risk backdrop improved. USD-JPY resistance now stands at the April 6 highs of 109.39, with support at the 200-day moving average, currently located at 108.40.

    [GBP, USD]
    Cable bottomed at 1.2516 in early N.Y. after hitting a 1.2501 intra day low in London. The pairing later recovered to one-month highs of 1.2624, as general USD weakness persisted. Rolls-Royce announcement of 3,000 job cuts grabbed headlines in UK news, which came amid a crucial round of trade discussions between the UK and EU, the final round before the July-1st deadline the two sides have set themselves before deciding that the UK can extend its post-Brexit access to the EU's customs union and single market beyond the end of this year. The BoE has reportedly warned UK banks to be ready for a no-deal Brexit.

    [USD, CHF]
    EUR-CHF printed fresh five month highs of 1.0820, crossing above its 200-day moving average for the first time since January, as risk-on remained in place. The SNB has successfully been putting a cap on the franc, which has seen EUR-CHF in recent weeks skirt along just above the five-year low that was first seen on March 9th at 1.0505 without breaching it. Weekly sight deposit data out of Switzerland has pointed to the extent of SNB franc selling over the pandemic crisis period, which was most acute in March before basing out as global governments and central banks acted with interventions and stimulus packages. A rise in sight deposits can suggest the francs turning up after being sold by the central bank. The 1.0500 level in EUR-CHF, while not a fixed floor, has clearly been a line in the sand of the SNB.

    [USD, CAD]
    USD-CAD fell to three-month lows of 1.3466 into the North American open, reacting to a modest uptick in WTI crude prices over the $37 mark. The pairing then bounced to 1.3541 highs following the wider than expected Canada trade deficit. The pairing later headed back under 1.3500, as Wall Street has turned opening losses into modest gains. The 200-day moving average at 1.3462 marks the next major support level.

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