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By XE Market Analysis March 26, 2020 2:36 pm
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    XE Market Analysis: Asia - Mar 26, 2020

    The Dollar was lower across the board in N.Y. trade on Thursday. The unwinding of huge flows seen into the USD over the past couple of weeks related to virus related safe-haven buying has been driven by huge Fed stimulus, and the passing of the Congressional virus aid package. Barring new COVID-19 developments, we look for further Dollar selling over the next few sessions. The huge jobless claims rise on Thursday, in excess of 3.0 mln, had little market impact, as that number had been bandied about through the week. Indeed, Wall Street rallied sharply, posting its third straight session of gains. EUR-USD rallied to 1.1045 from opening lows of 1.0928. USD-JPY eased from near 110.10 to lows of 109.35. USD-CAD fell from over 1.4180 to 1.4010, while Cable ramped up over 1.2180 from a bottom near 1.1930.

    [EUR, USD]
    EUR-USD took a look at its 50-day moving average at 1.0997, peaking at 1.0990 early in the session, before easing to 1.0950 lows. General Dollar weakness has prevailed through the week, with more losses expected given the unit's overbought backdrop, and mega-stimulus from the Fed and the Federal Government. The pairing later headed tp 1.1045 highs before steadying. The next major resistance level over the 1.1000 mark is the 200-day moving average, currently at 1.1083.

    [USD, JPY]
    USD-JPY bottomed at a five-session low of 109.35, down from near 109.95 at the open. The Dollar has been broadly sold through the week, as massive Fed intervention, including Dollar swaps, along with the passage of a $2+ trillion U.S. fiscal stimulus package have weighed on the USD. While USD funding mechanisms have improved since the start of the week, the safe-haven Greenback will likely retain some of the sharp gains between March 10 and March 19.

    [GBP, USD]
    Cable made eight-session highs of 1.2181 after the London close. That's over 6 big figures up on the 35-year low that was seen last week at 1.1409. About two thirds of this has reflected broad Dollar weakness, at the influence of the Fed policies, while the broad stabilization in global markets in recent days, from unnerved risk-off positioning to a choppy consolidation, has given the pound a chance to rebound, having underperformed markedly during the recent acute periods of risk aversion. The BoE's March Monetary Committee Meeting was something of a non-event for markets, with policy settings left unchanged, although it provided an opportunity for it to justify its recent emergency moves to cut the repo rate from 0.75% to 0.10% while expanding its purchase program.

    [USD, CHF]
    EUR-CHF recovered to over three-week highs of 1.0654 on Thursday, as stimulus hopes kept risk-on conditions in play for the third straight day. Safe haven demand for the CHF will likely continue on and off amid heightening concerns about the global economic disruptions being caused by efforts to contain the coronavirus.

    [USD, CAD]
    USD-CAD fell to eight-session lows of 1.40108, down from overnight highs of 1.4275 seen during the London morning session. The pairing headed lower, despite oil price weakness, as the USD overall lost ground, likely due to the unlimited supply of Fed-supplied Dollars. Further oil price losses however, will limit USD-CAD downside going forward.

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