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By XE Market Analysis May 4, 2020 2:23 pm
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    XE Market Analysis: Asia - May 04, 2020

    The DXY rallied from Asian opening lows of 99.09 to 99.60 highs during the N.Y. session, driven largely by EUR-USD losses. Major Dollar pairing ranges were relatively narrow again, as has been the case of late. For data, the March factory report was weak, but near expectations, resulting in little market impact. Wall Street was lower, with losses driven by ramped up tensions between the U.S. and China on the pandemic blame game, and comments from Warren Buffett over the weekend, who said he did not see any attractive investments currently. Treasury yields moved higher. EUR-USD fell from 1.0943 seen at the open, later falling to 1.0895 lows. USD-JPY peaked at 107.07, later falling back to near opening levels around 106.80. USD-CAD dropped to 1.4051 on oil gains, later steadying near 1.4090. Cable was sideways between 1.2412 and 1.2450.

    [EUR, USD]
    EUR-USD dipped from early highs of 1.0943 to a base of 1.0900 in morning trade. Growing tensions between the U.S. and China, with the former blaming the coronavirus pandemic on the latter, and threatening to take measures, including fresh tariffs, have fostered a new phase of risk aversion in global markets, which in turn is now underpinning the dollar against most other currencies, including the Euro. After the London close, the Euro dipped to 1.0895 lows. The 20-day moving average is the next support level, currently sitting at the 1.0882 mark.

    [USD, JPY]
    USD-JPY rallied from early lows of 106.76, later topping at 107.07 before heading back into 106.80. Quiet conditions prevailed, though the risk-off backdrop put a cap on the pairing. Trade was thin overnight as Japan remained on holiday until Thursday for Golden Week, seeing the pairing range between 106.94 and 106.67. We look for recent ranges to hold up through the first half of the week.

    [GBP, USD]
    Cable fell from Asian opening levels of 1.2495 to 1.2405 lows into the N.Y. open, its lowest level since last Wednesday, and under its 50-day moving average of 1.2432. The Pound has again proved sensitive to the backdrop of falling global stock markets. A survey out today showed that confidence among UK CFOs is the lowest ever recorded (in the Deloitte CFO poll). UK data this week is highlighted by the by the release of the final April reports for the services and composite PMI surveys on Tuesday, along with the April construction PMI report (Wednesday). The UK's lock down is set to last through to Thursday, when the government will make a second review.

    [USD, CHF]
    EUR-CHF pulled back from April highs of 1.0611 seen last Wednesday, as risk-taking levels turned lower again on Monday. The SNB has successfully been putting a cap on the franc, which has seen EUR-CHF in recent weeks skirt along just above the five-year low that was first seen on March 9th at 1.0505 without breaching it. Weekly sight deposit data out of Switzerland has pointed to the extent of SNB franc selling over the pandemic crisis period, which was most acute in March before basing out as global governments and central banks acted with interventions and stimulus packages.

    [USD, CAD]
    USD-CAD fell to 1.4051 lows in early North American trade, down from overnight highs of 1.4152. The partial recovery in oil prices supported the CAD, as WTI crude rallied, up over $1/bbl from lows, and trading over $20.00/bbl. The pairing later turned higher, topping at 1.4112. The 20-day moving average at 1.4032 is the next support level, with resistance at the April 23 high of 1.4198.

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