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By XE Market Analysis March 24, 2020 3:03 pm
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    XE Market Analysis: Asia - Mar 24, 2020

    The Dollar pulled back overnight, leaving the DXY at 101.07 into the N.Y. open on Tuesday. From there, USD demand returned, taking the index back over 102.10. Hopes for a Senate coronavirus stimulus package buoyed Wall Street, with major indices up near 10% intra day. New home sales were better than expected, though the results were ignored. EUR-USD fell to 1.0752 lows from pre-open highs of 1.0888, while USD-JPY printed one-month highs of 111.63, up from 110.60 early in the session. USD-CAD chopped around between 1.4375 and 1,4532, as GBP-USD faded under 1.1715, after peaking at 1.1800. Sentiment will remain tentative, with virus uncertainty continuing to drive panic-prone markets.

    [EUR, USD]
    EUR-USD headed to 1.0752 lows after the London close, down from 1.0888 highs seen into the N.Y. open. The Dollar firmed up through the session, after losing ground overnight on the back of risk-on conditions. USD demand picked up during U.S. hours, continuing the safe-haven buying seen of late, and keeping EUR-USD near the three-year lows printed on Monday. That 1.0636 lows now ,arks support, with resistance up near 1.0830.

    [USD, JPY]
    USD-JPY printed one-month highs of 111.63 after the London close. USD-JPY appears to be on a more or less one-way move higher, with the Dollar recently benefiting from save-haven buying on risk-off days, and the Yen losing ground on risk-on sessions. This theme can be expected to continue as long as the pandemic expands. The February 21 high of 112.19 is the next upside target, with support seen into the 110.00 level.

    [GBP, USD]
    Cable was relatively steady in N.Y. trade, after rallying through the London session. The pairing peaked at 1.1800 after the London close, later falling back to 1.1713 as Dollar demand picked up. The BoE's Monetary Policy Committee meets on Wednesday and Thursday this week, when it will release the minutes from last week's decision to cut the repo to 0.1% and expand QE. The UK government is implementing an aggressive stimulus package to counter the impact of virus-containing measures, billed as an "employment retention" coronavirus support package, which aims to keep the economy primed for a V-shaped rebound.

    [USD, CHF]
    EUR-CHF recovered to 1.0600 as a risk-on day developed, though still not too far from the five-year lows of 1.0525 in N.Y. on Friday. Safe haven demand for the CHF will likely continue 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. The Swiss central bank kept its policy rates unchanged at -0.75% today following its quarterly policy meeting, as had been widely expected. The SNB acknowledged the impact of virus developments, which also put upward pressure on the franc, and pledged that it will step up forex interventions to keep the currency under control. The SNB said growth will be likely be negative this year, and that it is considering to reduce the counter cyclical capital buffer (the German equivalent of this was cut to zero last week). The exemption threshold for the negative rates will be lifted, and while the SNB stressed that the banking system has sufficient liquidity for now, policymakers also emphasized that it will ensure that this stays like that.

    [USD, CAD]
    USD-CAD rallied from 1.4375 lows into the North American open, later peaking at 1.4532. USD gains overall have moderated through the session, though the unit remain in safe-haven buy-the-dip mode. Oil prices remain modestly higher on the session, though still near historic lows, which will continue to weigh on the CAD. USD-CAD support now comes at 1.4375, with resistance at 1.4560.

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