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By XE Market Analysis March 17, 2020 2:55 pm
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    XE Market Analysis: Asia - Mar 17, 2020

    The DXY printed better than three-week highs of 99.82 in N.Y. on Tuesday, bringing the three-plus year top of 99.91 seen in February back into focus. Virus related safe-haven buying has remained a driver of Dollar strength since the beginning of last week, as risk-taking levels overall remain pressured. Tuesday was an exception, as Wall Street and Treasury yields moved higher after encouraging fiscal stimulus talk from the U.S. administration was heard. Incoming data was mixed, as retail sales missed expectations, while industrial production was better than forecasts. EUR-USD fell to 1.0955 from near 1.1050 into the open, while USD-JPY headed to 107.67 from opening lows near 106.70. USD-CAD printed four-year highs of 1.4246. Cable fell to six-month lows of 1.2002.

    [EUR, USD]
    EUR-USD fell to better than two-week lows of 1.0955 at mid-morning, down from overnight highs near 1.1190. General Dollar demand in light of the global pandemic has been a major driver of late, though the dismal German ZEW report released ahead of the N.Y. open saw Euro selling step up. EUR-USD is now well under the 20-, 50- and 200-day moving averages. The 110.40 to 110.70 area now marks resistance, with support coming at 1.0950, the February 28 low.

    [USD, JPY]
    USD-JPY got a boost from pre-opening lows of 106.30, rallying to 107.67 as Wall Street clawed back a portion of Monday's historic losses, and as Treasury yields bounced. Pledges for fiscal intervention has followed the Fed's massive 100 bp rate cut and $750 bln re-start of QE. President Trump tweeted that "The United States will be powerfully supporting those industries, like Airlines others, that are particularly affected by the Chinese virus." Many other nations have announced various plans of interventions to deal with the economic impact of social distancing, draconian travel restrictions, and other measures being taking to curtail the spread of the virus. There are bound to be further setbacks in markets over the coming weeks, with uncertainty over how the virus will spread remaining the top driver. As a result, we may well see rapid swings in USD-JPY directions going forward.

    [GBP, USD]
    The Pound has been trading in a distinct pattern during the heightened phases of risk-off positioning, when it underperforms its major currency peers. This pattern is likely to remain the case while risk aversion persists in global markets. Last week's 50 bp BoE rate cut and the government announcement of a massive GBP 30 bln fiscal spending plan didn't have much impact on the pound. Cable printed a sic-month low of 1.2002 into the London close, down from near 1.2260 at the overnight high.

    [USD, CHF]
    EUR-CHF has settled back under 1.0600, but remains above the five-year low that was seen on Monday at 1.0505. Safe haven demand for the Swiss currency has returned amid heightening concerns about the global economic disruptions being caused by efforts to contain the coronavirus.

    [USD, CAD]
    USD-CAD rallied to new four-plus year highs of 1.4246, up from mid-morning lows of 1.4084. Oil prices remain near their four-year lows, with WTI crude trading to a base of $28.22, which have weighed heavily on the CAD of late. Otherwise, the USD remains in demand as a safe-haven currency, which will likely continue as long as the virus continues to spread.

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