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By XE Market Analysis June 29, 2020 2:39 pm
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    XE Market Analysis: Asia - Jun 29, 2020

    The Dollar was mostly higher in N.Y. trade on Monday, supported by much better than expected pending home sales and Dallas Fed index outcomes. The DXY rallied to 97.64 from opening lows of 97.13. Wall Street was sharply higher, despite ongoing virus concerns, buoyed by the data, and renewed hopes for a V-shaped economic recovery. EUR-USD fell from 1.1289 highs to 1.1220, while USD-JPY ticked up from 107.25 to 107.89. USD-CAD while GBP-USD dropped to 1.2250 from early highs of 1.2331.

    [EUR, USD]
    EUR-USD topped at 1.1289 in early N.Y. trade, later making its way to 1.1220 lows after the London close. Strong U.S. pending home sales and Dallas Fed index outcomes helped Dollar sentiment through the morning session. Further support came from reported month- and quarter-end USD buying. In the recent past, risk-on conditions, like those seen on Monday have weighed on the Greenback as safe-haven flows reverse. Today though, data and USD repatriation saw the USD rise.

    [USD, JPY]
    USD-JPY printed near three-week highs of 107.89, with the push to highs coming on the back of a strong rebound in pending home sales in May, and a much better than expected Dallas Fed index outcome. The pairing had opened near 107.25, after hitting lows of 107.04 in Asian dealings. Today's Wall Street rally, coming despite surging U.S. virus cases has provided support as well. USD-JPY is now above its 20- and 50-day moving averages, which are at 107.60 and 107.40, respectively. Resistance comes at the 200-day moving average, currently at 108.40.

    [GBP, USD]
    Cable was under pressure as the latest round of trade talks between the UK and EU got underway, and as the Dollar was buoyed by better data. GBP-USD printed a one-month low at 1.2252 after the London close. This is now the fourth consecutive week the pound has declined against the dollar. We continue to expect the UK currency to underperform in the weeks ahead, assuming there won't either be a significant breakthrough in UK-EU trade talks, nor a walk back in the BoE's apparent tapering in QE.

    [USD, CHF]
    EUR-CHF remained under 1.0700 in N.Y. trade on Monday, though well above Friday's one-month low of 1.0623, as risk taking levels headed higher. The cross had fallen back over the last couple of weeks, 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 been stuck inside of Friday's trading band, managing a 1.3699 high in early Asia, and opening the North American session at 1.3650 before printing a 1.3005 high at mid-morning. The pairing had topped at near one-month highs of 1.3716 on Friday. Firmer oil prices along with an improvement in risk taking levels weighed some on USD-CAD later, seeing a modest reversal to 1.3669. Risk taking levels and oil prices will continue to drive USD-CAD direction.

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