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By XE Market Analysis June 10, 2020 4:44 pm
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    XE Market Analysis: Asia - Jun 10, 2020

    The DXY was modestly lower in N.Y. morning trade, though inside of relatively narrow ranges ahead of the FOMC. Following the policy announcement, the Dollar edged initially higher, then fell following the FOMC announcement, where no policy changes were made, as-expected. The statement was nearly identical to the last one, but added "Financial conditions have improved, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses." USD-JPY initially traded to 107.45 from 107.25, then eased to near two-week lows of 107.00. EUR-USD meanwhile, fell under 1.1330 from 1.1365, then rallied to trend highs over 1.1415. The Fed's "lower for longer" mantra was the likely driver of USD weakness.The DXY dropped to new three-month lows of 95.72, though later recovered to 96.03 on late session USD short covering.

    [EUR, USD]
    EUR-USD was slightly lower in early N.Y. trade, after hitting a fresh three-month high of 1.1389 into the open, later easing to 1.13642. Lower Treasury yields, and a failure to breach the psych 1.1400 mark have resulted in a round of profit taking. The as-expected FOMC announcement saw some immediate chop, though EUR-USD subsequently rallied to trend highs over 1.1420. Buy-stops were reportedly tripped above the 1.1400 level.

    [USD, JPY]
    USD-JPY remained heavy through the morning session, but steadied above its earlier near two-week low of 107.17 ahead of the FOMC announcement. Today marked the third day of declines, as general USD weakness, along with today's risk-off session have weighed on the pairing. USD-JPY initially rallied to 107.45 from 107.25 after the Fed, though quickly reversed course to hit 107.00 lows.

    [GBP, USD]
    Cable printed a high at 1.2802 into the N.Y. open, then idled near 1.2750 through the morning. The Pound vaulted to 1.2813 highs after the Fed, later falling back to lows near 1.2740. From the UK-EU trade negotiation front, it appears that there has been little fresh traction in negotiations, with London demanding much more generous access to fisheries than under EU proposals. Unless there is a breakthrough in trade talks, the pound's upside potential is likely to remain limited.

    [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 rallied from opening lows of 1.3373 to a mid-morning high of 1.3437, though steadied near 1.3390 while waiting for the Fed announcement. Risk-off conditions along with wobbly oil prices provided some support to the pairing. Following the Fed, the pairing fell to lows of 1.3313, levels last seen on February 26, with the move driven by a a combination of a broadly weaker USD, and a concurrent oil price rally.

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