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By XE Market Analysis June 18, 2020 2:24 pm
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    XE Market Analysis: Asia - Jun 18, 2020

    Major Dollar pairings were mostly higher in N.Y. on Thursday, with safe-haven demand driving the DXY to two-week highs of 97.58 from morning lows of 97.24. The Greenback's move higher came on fresh safe-haven buying following a much better Philly Fed index bounce, though a significantly higher than expected jobless claims print, and on increasing concerns over the spread of coronavirus both in the U.S. and other regions around the world. EUR-USD opened at 1.1235, later falling to 1.1186 lows. USD-JPY was range bound, with the Yen's haven status largely offset by the USD's haven status. The pairing ranged between near 106.95 and 106.67. USD-CAD moved higher, ignoring higher oil prices, topping at 1.3614 from lows of near 1.3550. Cable dropped to 1.2403 from post-BoE announcement highs of 1.2549.

    [EUR, USD]
    EUR-USD printed a new two-week low of 1.1204 in morning trade, down from opening highs near 1.1240. Save-haven USD buying was likely behind the modest drop. Later in the session, the pairing bounced over 1.1230 as Wall Street recovered early losses, though as stocks again turned red, EUR-USD fell back to 1.1186. Mixed risk taking levels, largely driven by a surge in virus cases in several U.S. states, and in Beijing, have prompted the save-haven Dollar buying. Support at the 20-day moving average, which currently sits at 1.1186.

    [USD, JPY]
    USD-JPY dipped to one-week lows of 106.67, down from opening levels near 106.95. The dip came despite the brief bounce on Wall Street, as the safe-haven Yen finds buyers due to the uncertain outlook for the coronavirus, as cases continue to rise in a number of U.S. states, and in China. USD-JPY resistance comes at the 50-day moving average, currently at 107.48, with support at the June 12 low of 106.58.

    [GBP, USD]
    Cable fell sharply ahead of the N.Y. open, and continued on a lower path through much of the session. The initial "on-the-fact" buy reaction to the BoE's policy announcement was quickly unwound. The BoE's lack of mention on the possibility of negative interest rates had been the principal driver of the pound's post-announcement bounce, but the central bank still expanded expanded QE by GBP 100 bln while pledging a further expansion if needed, and warned about the risks stemming from a second wave of infections in reopening developed economies. Cable printed a three-week low at 1.2403, down from post-BoE highs of 1.2549.

    [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. The SNB policy meeting was on Thursday, which stuck with negative rates for the foreseeable future and strengthened its commitment to intensify FX intervention if necessary to keep the CHF under control.

    [USD, CAD]
    USD-CAD has rallied from pre-open lows of 1.3521 to 1.3594 at mid-morning, with the highs coming following the sharper than expected drop in Canada April wholesale trade. The pairing had been on the decline through the week, perhaps rising this morning on short covering ahead of Friday's key Canada April retail sales release. The pairing hit 1.3612 highs in afternoon trade. We look for a further 15.0% decline in retail sales, versus the 10.0% drop seen in March. USD-CAD support is at Wednesday's low of 1.3510, with resistance at the 20-day moving average at 1.3612.

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