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By XE Market Analysis June 5, 2020 3:07 pm
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    XE Market Analysis: Asia - Jun 05, 2020

    The DXY recovered some ground following the shock non-farm payroll increase, though not before printing new near three-month lows of 96.44. The index subsequently bounced to 97.01 highs at mid-morning in N.Y. The incredible 2.51 mln increase in jobs set risk-on into motion, resulting in steep gains on Wall Street, (the NASDAQ recorded all-time highs), and sharply higher Treasury yields. EUR-USD eased from opening highs of 1.1343, later falling to 1.1280 lows. USD-JPY bottomed at 09.25 ahead of the jobs report, before rallying to 109.86 highs. USD-CAD fell from 1.3463 to trend lows of 1.3390 on a better Canada employment report, while Cable printed near three-month highs of 1.2730, later falling back to lows near 1.2660.

    [EUR, USD]
    EUR-USD pulled back from the near three-month highs of 1.1384 seen in London morning trade, dropping to 1.1317 lows ahead of the N.Y. open, then falling to a 1.1280 base in the aftermath of the shock U.S. employment report. Despite the pullback, EUR-USD has managed to print nine-straight sessions of higher daily highs and low, seeing the pairing rally to today's high from 1.0870 over the past nearly two-weeks. The driver of the rally started with Dollar weakness, as a return in risk-taking saw safe-haven Dollar demand reverse course. More recently, the ECB's aggressive stimulus package, announced on Thursday, supported EUR-USD as well.

    [USD, JPY]
    USD-JPY rallied to levels last seen on March 26, topping at 109.86 following the stunning recovery in the U.S. non-farm payrolls. The pairing had been trading near 109.20 ahead of the jobs report. The soaring risk-backdrop has provided support, though given the sharp gains seen through the week, modest profit taking stepped in ahead of the weekend.

    [GBP, USD]
    Cable today posted a near-three-month high at 1.2730. A crucial round of trade discussions between the UK and EU has been ongoing this week, being 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. A press conference, or at least a statement, is likely to come later today. Prime Minister Johnson will reportedly meet with European Commission President von der Leyen later this month. The BoE has reportedly warned UK banks to be ready for a no-deal Brexit.

    [USD, CHF]
    EUR-CHF had its best week in months, lifting to 1.0920 highs on Friday, and up from 1.0666 seen on Monday. 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 headed to trend lows of 1.3393 from 1.3440 following the shock increase in Canada employment, where 290k jobs were added, versus consensus for a -500k outcome. The pairing had been on the decline earlier in the session, as WTI crude rallied 5% to three-month highs of $39.55. The next USD-CAD downside target comes at 1.3377, which represents the March 6 low.

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