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By XE Market Analysis March 10, 2020 2:14 pm
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    XE Market Analysis: Asia - Mar 10, 2020

    The Dollar put in a rare up-day on Tuesday, with the DXY recovering to 96.20 from early lows of 95.62.A partial recovery in stocks, along with firmer Treasury yields helped support the USD. There was no top tier data to move the markets on Tuesday, though focus remained on the spread of coronavirus. Talk of U.S. fiscal stimulus to aid sectors most impacted by the virus saw the Dow rise nearly 1,000 points early on, though as the administration downplayed any economic help in the near term, Wall Street faded. EUR-USD fell from near 1.1395, later bottoming just under 1.1300. USD-JPY slipped to 103.22 lows as stocks faltered, later rallying back to 104.50. USD-CAD hit four-year highs of 1.3796. Cable slipped under 1.2920 from 1.3040.

    [EUR, USD]
    EUR-USD remained near session lows of 1.1332, staying under the 1.1400 mark through the day, and well under the year-plus high of 1.1496 seen Monday. The bounce in risk taking levels helped support the Dollar on Tuesday, as stocks and Treasury yields headed higher following the rout seen Monday. We have certainly not seen the last of the coronavirus impact on global markets, so today's price action can be taken more as a pause than a bottom.

    [USD, JPY]
    USD-JPY rallied back from three-plus year lows of 101.18 lows seen on Monday, rising to 105.21 highs into the N.Y. open. The pause in market panic mode, which overwhelmed markets yesterday, including the partial recovery in equities and Treasury yields, allowed USD-JPY short covering to step in. Early sharp gains seen on Wall Street faded considerably since then, seeing USD-JPY pull back under 104.00.

    [GBP, USD]
    Cable reversed course lower in N.Y. on Tuesday, falling from near 1.3040 at the open, to lows under 1.2920. There are two factors behind this underperformance, one being about the risk averse environment and the other being about Brexit-related risk. As for Brexit, given the uncompromising signals the UK government has sent, along with the limited time frame for trade negotiations, there is also a risk that the UK leaves the end of the post-Brexit transition period without a new trading deal with the EU. We expect the pound to retain a net lower bias versus its main peers.

    [USD, CHF]
    EUR-CHF bounced modestly, topping over 1.0600 after dropping to a fresh five-year low of. 1.0544, reflecting safe haven demand for the Swiss currency as concerns rise about the global economic disruptions being caused by efforts to contain the COVID-19 virus. The Swiss franc can be expected to rise further in the coming days, as the virus continue to spread.

    [USD, CAD]
    USD-CAD remained elevated, and headed above Monday's 34-month high of 1.3760, peaking at 1.3796 after the London close to print a four-year top. The collapse in oil prices, due to the price war started by Saudi Arabia and Russia will likely continue to weigh on the CAD. WTI crude rallied 8% overnight, though at $34/bbl, it remains well under recent highs over $45. USD-CAD's next upside target is 1.3859, seen in February of 2016.

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