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By XE Market Analysis March 18, 2020 2:56 pm
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    XE Market Analysis: Asia - Mar 18, 2020

    The Dollar index surged to three-year highs of 101.73 in N.Y. trade on Wednesday, up from overnight lows of 99.16. Heavy demand for cash Dollars has been driving the USD higher, as the virus panic appears to rise on a daily basis. Wall Street was crushed lower, resulting in the tripping of a circuit breaker when the S&P 500 last 7%. Later, losses approached 10%. Treasury yields were mixed with the front-end supported by safe-haven buying. Housing starts were better than expected, though no one paid any attention. EUR-USD fell from 1.1015 into the open to 1.0802, as USD-JPY rallied to 108.65 from near 107.25. USD-CAD hit new four-year highs over 1.4650 as crude oil prices collapsed. GBP-USD meanwhile, cratered to 35-year lows of 1.1450.

    [EUR, USD]
    EUR-USD printed near four-week lows of 1.0802, down from pre-open highs over 1.1015. Broad demand for Dollars has been the main driver through the session, with cash positions to cover margin calls being built up in the likelihood of further losses in equities and commodities. Economic pain will continue for the foreseeable future, which should keep the USD in demand.

    [USD, JPY]
    USD-JPY touched near three-week highs of 108.65, up from opening lows of 107.23. Despite the severe risk-off backdrop, which usually supports the Yen, broad Dollar demand has remained a driver, as the global economy continues to implode due to the coronavirus. The DXY has rallied to near three-year highs, so far peaking at 101.73, up from overnight lows of 99.16. USD-JPY support comes at the 200-day moving average at 108.25, with resistance at 108.89, which represents the 50-day moving average.

    [GBP, USD]
    Sterling has been trading in a distinct pattern during heightened phases of risk-off positioning, when it underperforms its major currency peers, including the dollar, euro, Swiss franc, and yen. This pattern is likely to remain the case while risk aversion persists in global markets. Cable collapsed to levels last seen in 1985, falling to 1.1450 after the London close, from 1.2030 into the N.Y. open. A further 25 bps cut looks likely next Thursday, from the BoE which would take the repo rate to zero. An expansion in the QE program also looks likely.

    [USD, CHF]
    EUR-CHF fell back to five-year lows of 1.0532 in N.Y. on Wednesday . 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. More downside for the pairing would appear to be in the cards.

    [USD, CAD]
    USD-CAD rallied to new four-year highs of 1.4652, after closing Tuesday just over 1.4200. The cratering in oil prices to 18-year lows, along with another severe risk-off session remain the drivers of CAD weakness. USD-CAD has printed 11-straight sessions of higher daily highs, on its way from March 3 lows of 1.3320. The January 2016 high of 1.4690 is the next major resistance level.

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