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By XE Market Analysis March 13, 2020 2:49 pm
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    XE Market Analysis: Asia - Mar 13, 2020

    The Dollar ended the week on a high note, after posting gains since Tuesday. The DXY topped at a two-week high of 98.78 on Friday, coming from the 18-month low of 94.65 seen Monday. It was a risk-on session to end a very rough week, as Wall Street and Treasury yields rebounded some following massive Fed and ECB stimulus. Coronavirus remained front and center, and market volatility is set to continue for the foreseeable future. Incoming trade price and consumer sentiment data were largely ignored by markets. EUR-USD bottomed at 1.1055, down from highs of 1.1186. USD-JPY rallied to 108.00 highs from 106.48, while USD-CAD peaked at four-year highs of 1.3995. Cable slid to five-month lows under 1.2335.

    [EUR, USD]
    EUR-USD bottomed at 1.1055 after the London close, matching the near two-week 1.1055 bottom seen on Thursday. The pairing was contained overall though, as dueling stimulus from both the Fed and ECB kept the pairing in check. EUR-USD downside from here may prove to be limited, as traders look ahead to next week's FOMC meeting, where as much as 100 basis points of cuts could be on the table.

    [USD, JPY]
    USD-JPY ramped up to nine-session highs of 108.00, up from opening lows of 106.48, and from the overnight bottom of 194.51. A rare session of risk-on conditions, as witnessed by rebounding commodity and equity prices, along with a higher Treasury yields, all combined to prompt a pretty decent round of short covering into the weekend. The next major resistance level comes at 108.26, which represents the 200-day moving average.

    [GBP, USD]
    Cable was slammed to fresh five-month lows of 1.2335, with a good chunk of lossess coming following the London close. The BoE's 50 bp rat cut on Wednesday, an unexpected intra-meeting emergency move, has been a factor since then, awhile the government's announcing of a massive GBP 30 bln fiscal spending plan, detailed during its 2020-21 budget presentation before parliament, didn't have much supportive impact on the pound. With the UK and Eurozone heading for a coronavirus induced recession, this is not a good time for trade negotiations between the UK and EU, especially the UK's desire to leave the post-Brexit transition membership of the EU's single market and customs union at the end of the year.

    [USD, CHF]
    EUR-CHF rallied briefly over 1.0610 in N.Y. morning trade on Friday, though later pulled back under 1.0550 as short positioning stepped in ahead of uncertainty on the virus front into the weekend. The cross saw new five-year lows of 1.0541 on Thursday. The cross continued 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 rallied to 1.3931 highs at mid-morning in North America, rising from pre-open lows of 1.3832. The pairing pulled back through the European session, as oil prices caught a recently rare bid. WTI crude topped over $33.85, though has since fallen back under $32, allowing USD-CAD to gain altitude once again. Later, USD-CAD reportedly hit buy stops on the move above Thursday's four-year high of 1.3961. The pairing spiked up to 1.3195 highs then quickly pulled back toward 1.3950, as sellers stepped in ahead of the psych 1.4000 level. The BoC surprised with a 50 basis point rate cut late in the session, though with markets pricing in 100 bp cut from the Fed next week, it appeared traders had priced in this more modest BoC cut. USD-CAD revealed little upside reaction to the move.

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