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By XE Market Analysis May 6, 2020 2:56 pm
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    XE Market Analysis: Asia - May 06, 2020

    The horrible, but as-expected ADP employment survey had little market impact on Wednesday, leaving the Dollar mixed over all, as it ended up lower versus the Yen, near unchanged against the Euro, and higher versus the CAD and GBP. Wall Street was mixed, with the NASDAQ outperforming, while Treasury yields rose ahead of massive supply both in Treasuries and corporate. EUR-USD topped at 1.0826, fell to 1.0790, then settled about where it started at 1.0810. USD-JPY hit 7-week lows of 105.99, down from early highs of 106.20. USD-CAD rallied to 1.4157 highs, up from 1.4080 at the open. Cable fell to 1.2334 low from 1.2393 highs.

    [EUR, USD]
    EUR-USD lifted from the near two-week low of 1.0783 seen ahead of the open, topping later at 1.0826 before slipping back under 1.0800 into the London close. The pairing remains heavy after printing three consecutive lower daily lows. The market continues to digest the German constitutional court ruling on Tuesday that some of the measures the Bundesbank is taking under the ECB's Public Sector Purchase Program are not covered by EU law, which has weighed on the Euro, while the European Commission slashing its forecasts for Eurozone growth, to -7.7% for 2020, likely hasn't helped as well.

    [USD, JPY]
    USD-JPY broke out of its recent trading range, dropping to 105.99 lows, levels last seen on March 17. The safe-haven Yen appears to have been bid up the past 2 sessions on Trump talk where he has threatened to impose new tariffs on China, and even cancel the phase 1 trade deal should China fall short on buying U.S. goods. Rising tensions between the two countries are likely to continue to support the JPY going forward. USD-JPY buyers are noted into the 106.00 level, though sell-stops are expected on a move under 105.95.

    [GBP, USD]
    Cable fell to near two-week lows of 1.2335 into the London close, down from early highs of 1.2392. The UK's April construction PMI plummeted to a headline record low of of just 8.2, down from 39.3 in March. UK Prime Minister Johnson earlier said that he will on Sunday detail the first phase of reopening in the UK, having been in lockdown since March 23rd.

    [USD, CHF]
    EUR-CHF was steady in the low 1.05s in N.Y. trade on Wednesday, as risk-taking levels more neutral. 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 advanced to 1.4157 highs, up from overnight lows of 1.4023. Much of the move higher came in concert with oil price declines, as WTI crude fell from the three-week highs of $26.08 seen in Asia, to $22.59 lows printed early in the North American session. The April 23 high of 1.4198 now marks resistance, with support at yesterday's 1.4008 lows.

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