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By XE Market Analysis June 16, 2020 2:51 pm
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    XE Market Analysis: Asia - Jun 16, 2020

    The Dollar caught a bid in N.Y. morning trade on Tuesday, supported by a blowout U.S. May retail sales report, which saw a record 17.7% rise. Industrial production data was better than consensus forecasts as well. Wall Street was sharply higher, stumbling just briefly after a fresh virus breakout in Beijing prompted China officials to advise residents to not leave the city. Treasury yields were higher as well. EUR-USD fell from early highs of 1.19 to 1.1232. USD-JPY peaked at 107.61, later easing to 107.21 lows. USD-CAD ran up to 1.36.22 from 1.3502, later falling into 1.3545. GBP-USD fell from 1.2681 highs to 1.2555.

    [EUR, USD]
    EUR-USD eased in N.Y. trade on Tuesday, bottoming at 1.1228, after opening at 1.1319 highs. Blowout U.S. retail sales and improved industrial production helped the Dollar's tone, though risk-on conditions generally limited the scope of gains. EUR-USD remains in consolidation mode, remaining inside of the about 1.1200 to 1.1400 trading band seen for nearly two-weeks now.

    [USD, JPY]
    USD-JPY rallied though the morning session, peaking at 107.61, after opening near 107.25. Stronger U.S. retail sales and production data supported, though the break above the 50-day moving average at 107.55 quickly prompted some profit taking, which saw the pairing hit its session low of 107.21 low into the London close. Monday's 107.00 low provides the next support level. It appears that until the next risk event, the pairing is set to remain sideways between 107.00 and 108.00.

    [GBP, USD]
    Cable topped at 1.2687 in London morning trade, before turning lower, after running out of steam ahead of the 200-day moving average at 1.2692. The pound sold off through the N.Y. morning, bottoming at 1.2555. Rekindled momentum in UK-EU trade discussions, which was signaled by Monday's joint statement by the UK and EU following a top-level conference , emphasized that negotiations will be intensified, supportive of Sterling. A Bloomberg report, citing people with "knowledge of the conversation," confirmed that there is a sense that the deadlock in negotiations has been broken. This effectively signals intent on both sides to find compromises on key sticking points, such as fisheries and 'level playing field' rules.

    [USD, CHF]
    EUR-CHF has fallen back over the last week, 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, when the consequences of the pandemic increasing bets about a possible breakup of the euro area, and even the EU. However, since the Franco-German backed EU recovery fund gained traction in mid May, these bets have gone sour, which led to a rebound in EUR-CHF. The recovery fund is up for ratification at the June 18th-19th EU summit. Assuming this passes, as looks likely , this should keep EUR-CHF supported for a while.

    [USD, CAD]
    USD-CAD headed to North American highs of 1.3622, up from early four-session lows of 1.3502. Firmer oil prices earlier in the session, along with risk-on conditions kept a lid on the pairing, though reports that Beijing's new virus outbreak has led to officials advising people not to leave the city knocked Wall Street off its highs, resulting in some fresh USD safe-haven buying. WTI crude has since fallen back nearly $2/bbl to $37.12 lows, which will limit USD-CAD's downside.

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