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By XE Market Analysis June 17, 2020 2:53 pm
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    XE Market Analysis: Asia - Jun 17, 2020

    The Dollar was modestly higher in N.Y. trade on Wednesday, benefiting from safe-have buying as risk taking levels moderated on the back of new virus outbreaks in some U.S. states, and a fresh outbreak in Beijing. Wall Street was mixed early, though perked up some ahead of the close. Incoming U.S. data had May housing starts, which were softer than expected, but had little market impact. EUR-USD dipped to 1.1207 from opening highs near 1.1250. USD-JPY was range bound between 107.17 and 107.43. USD-CAD peaked at 1.3594 after opening near 1.35020. Cable meanwhile, fell from near 1.2565 to 1.2512, before heading back to 1.2550. Thursday's docket brings weekly jobless claims and the June Philly Fed index.

    [EUR, USD]
    EUR-USD hit two-week lows of 1.1207 at mid-morning, down from opening highs near 1.1250, and overnight highs of 1.1294. Mixed risk taking levels, largely driven by a surge in virus cases in several U.S. states, and in Beijing, have prompted some save-haven Dollar buying this morning. Support is seen at the June 4 low of 1.1194, though London backed short covering ahead of the close has seen EUR-USD bounce briefly over 1.1235.

    [USD, JPY]
    USD-JPY was fairly steady in N.Y. morning trade, after slipping to 107.17 range, down from 107.43. The 50-day moving average, currently at 107.52 has provided a ceiling so far this week, while Monday's 107.00 low is the next the next support level. It appears that until the next risk event appears, the pairing is set to remain sideways between 107.00 and 108.00.

    [GBP, USD]
    Cable bounced to 1.2555 after posting a fresh two-day low at 1.2512 in N.Y. morning trade. Traders will now turn their focus to the BoE, with the MPC announcing on Thursday following a two-day meeting. The BoE's policy review comes with UK May CPI having ebbed to a rate of just 0.5% y/y, a four-year low and extending a disinflation trend after 0.8% y/y in April. The data will have been well anticipated by policymakers, which have already implemented crisis response measures as a consequence of the coronavirus pandemic. The central bank is likely to keep its powder dry and leave policy settings unchanged at its announcement tomorrow, but will accompany this with dovish guidance.

    [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 rallied following the cooler Canada CPI outcome. The pairing topped at 1.3594, up from 1.3526 at the open. The overnight Asian high was at 1.3570, with the London low coming in at 1.3510. A bullish EIA petroleum inventory report saw WTI crude head higher, which took USD-CAD back into 1.3540. Oil prices remain relatively steady overall however, and have not bee much of a driver of CAD direction of late. Recently positive risk taking levels have limited USD-CAD upside so far this week. The 200-day moving average at 1.3474 now provides support, with resistance at the 20-day moving average, currently at 1.3630.

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