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By XE Market Analysis June 9, 2020 2:13 pm
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    XE Market Analysis: Asia - Jun 09, 2020

    The DXY hit a fresh three-month low in N.Y. on Tuesday, bottoming at 96.23, down from 96.80 at the open, and from the 98.32 highs seen on June 1. Lower Treasury yields, and weak data appeared to weigh on the USD. Wholesale sales along with a near million drop in the JOLTS job openings were the culprits. Wall Street too a breather through the morning, with profit taking from record highs the driver. EUR-USD opened near 1.1285, later topping at 1.1365 into the London close. USD-JPY sagged from 108.25 to 107.63, while USD-CAD fell from near 1.3470 to 1.3384. Cable meanwhile headed to 1.2745 from early lows of 1.2650. Wednesday brings the FOMC announcement and press conference. The Fed will be leaving its 0%-0.25% rate band intact, and reiterate its lower-for-longer posture. And after Friday's blowout jobs report, we suspect Fed Chair Powell will want to convey a cautiously optimistic tone.

    [EUR, USD]
    EUR-USD has recovered from the four-session lows of 1.1242 seen in London morning trade, making its way back to 1.1365 highs. Weaker wholesale sales and a sharp drop in the JOLTS job openings took the pairing to its highs, though the Euro had been on the rise since the open. Lower Treasury yields have been supportive of EUR-USD amid the moderately risk-off session. Overall, the move higher can be put down to short covering ahead of the FOMC on Wednesday. No policy moves are expected, though traders will look for the Fed's level of optimism to determine EUR-USD's next move.

    [USD, JPY]
    USD-JPY losses continued into Tuesday, with follow through selling taking the pairing to six-session lows of 107.63 in London morning trade. Profit taking was the driver of losses on Monday, after a failure to break the 110.00 level, while Tuesday's sell-off has come on the back of risk off conditions, as global equity markets are for the most part, under water. USD-JPY's move under its 200-day moving average at 108.44 also provided a sell trigger. Support is now at 107.50, the June 2 low.

    [GBP, USD]
    Cable dipped to 1.2620 lows from London highs of 1.2721 ahead of the N.Y. open, though regained ground through the session as the Dollar generally took on a weaker tone. U.K. trade negotiations with the EUR continue to hit snags, the latest being fisheries, which has resulted in bouts of softness for Sterling. Today though, a softer USD has provided support to cable, leaving a 1.2745 top.

    [USD, CHF]
    Recent euro gains have been a boon to EUR-CHF, which is now trading at its best levels of the year, above 1.0850. The SNB had been defending an informal line-in-the-sand at 1.0500 since early March in an effort to limited franc appreciation and, thereby, disinflationary forces on the Swiss economy.

    [USD, CAD]
    USD-CAD was higher early on, running up to 1.3488 in London morning trade, after bottoming at 1.3357 during Asian hours. The failure to break under Monday's 1.3355 low, along with risk-off conditions and lower oil prices, prompted some short covering early, though later, as the USD retreated broadly, USD-CAD fell back to 1.3384. The pairing's seven session streak of lower daily lows appears to have come to and end today. Bigger picture, oil prices and risk-taking levels will continue to determine USD-CAD direction going forward.

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