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By XE Market Analysis May 5, 2020 2:54 pm
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    XE Market Analysis: Asia - May 05, 2020

    The DXY printed one-week highs of 99.97 into the open on Tuesday, up from the 99.33 low seen in London morning trade. The Dollar pulled back some in early N.Y. trade, later recovering to near unchanged on the session. Incoming data saw the March trade deficit wide, while the services ISM fell less than expected, but still to 11-year lows. Wall Street advanced on hopes for the re-opening of the economy, while Treasury yields ticked up as well. EUR-USD opened at session lows of 1.0830, making its sway to 1.0888 highs before falling back to 1.0835. USD-JPY bucked the trend, falling from early highs near 106.75, later bottoming at 106.47. USD-CAD fell to 1.4008 lows, before recovering to over 1.4060, while GBP-USD topped 1.2480 before sinking to 1.2430 lows. Tomorrow brings the April ADP employment survey, where we expect private payrolls to plunge 20.1 mln.

    [EUR, USD]
    EUR-USD bottomed at 1.0826 into the N.Y. open, later perking up to 1.0887 before falling back to 1.0835 where it has since steadied. The pairing fell from 1.0915 to the lows after Germany's constitutional court gave the ECB three months to tweak the public sector purchase program and thus the central bank's extensive QE measures, ruling that some of the measures the Bundesbank is taking under the ECB's Public Sector Purchase Program are not covered by EU law. EUR-USD support now comes at the April 29 low of 1.0819.

    [USD, JPY]
    USD-JPY headed to session lows of 106.75, down from opening highs near 106.75, despite risk-on conditions, though still inside of recent trading ranges. The Dollar continues to trade in a mixed fashion, and for the most part in narrow trading bands. Japan's Golden Week holidays have thinned out volumes generally. Support is at Thursday's low of 106.41, with resistance at the Asian session high of 106.90.

    [GBP, USD]
    Cable held within Monday's range, centering around 1.2450, which was near to midway levels of the broadly sideways consolidation range the pair has been seeing since early April. The BoE's May Monetary Policy Committee meeting is up this week, which will be accompanied by its quarterly Inflation Report. The central bank has already slashed its policy repo interest rate to near zero while expanding its QE program and putting in liquidity measures in response to the economic and financial consequences of the pandemic-forced economic lock down. As with the Fed and ECB last week, this policy meeting isn't likely to be too eventful, with the policy framework expected to be left unchanged for now.

    [USD, CHF]
    EUR-CHF edged up over 1.0555 on Tuesday, as risk-taking levels turned higher on Tuesday. 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 touched 1.4008 lows, down from London morning session highs of 1.4095. A near 20% rally in WTI crude has weighed on the pairing, seeing WTI crude prices hit three-week highs of $24.20. The price of Western Canadian Select crude grade has reportedly rebounded over $19/bbl, supportive of the CAD, after trading in negative territory for a few days in the past weeks. Support is now at the 50-day moving average at 1.3966.

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