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By XE Market Analysis May 7, 2020 2:57 pm
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    XE Market Analysis: Asia - May 07, 2020

    The Dollar attempted to rally early in the N.Y. session on Thursday, though later succumbed to selling pressures, taking the DXY from mid-morning highs of 100.40 to afternoon lows near 99.80. Incoming data was again largely ignored, with jobless claims rising more than expected, and productivity figures fall less than forecasts. Wall Street rallied on talk of resuming U.S./China trade talks, while Treasury yields edged lower. EUR-USD rallied from 1.0767 lows, peaking later over 1.0830 after the London close. USD-JPY peaked at 106.65 from opening levels near 106.40, later falling under 106.25. USD-CAD bottomed at 1.3953 after opening near 1.4080. Cable recovered from early low of 1.2266, rallying over 1.2370 after the London close. Friday of course, brings the April jobs report, where we expect non-farm payrolls to fall 22.0 mln.

    [EUR, USD]
    EUR-USD rallied from two-week lows of 1.0767 to highs over 1.0830 through the morning session. European buyers were reported buyers into the London close. With London on holiday on Friday, we suspect some of the buying interest has been short covering into the long weekend. Recall, EUR-USD has posted four-consecutive sessions of lower daily lows, coming from 1.1020 highs from last Friday to today's low of 1.0767. Bigger picture, given the full-bore easings from both the ECB and the Fed, and equally dismal economic outlooks, we see EUR-USD maintaining recent trading ranges for the time being.

    [USD, JPY]
    USD-JPY made its way to 106.65 highs, after trending lower through much of the week. Market sentiment improves on the back of better China export data, which weighed some on the Yen. The pairing has since retreated under 106.25. Big picture, the safe-haven JPY will likely return to bouts of strength, as economic recovery from the pandemic is not likely to be linear.

    [GBP, USD]
    Cable printed a better than two-week low of 1.2266 in early N.Y. trade, on its way from 1.2413 highs seen after the BoE kept policy unchanged, as expected, and called for a strong economic rebound in 2021. GBP-USD subsequently headed higher, as broad USD weakness emerged, taking the pairing to highs over 1.2375 after the London close. The U.K. is on holiday Friday, which might have driven a round of Sterling short-covering.

    [USD, CHF]
    EUR-CHF was slightly higher in the low to mid-1.05s in N.Y. trade on Thursday, as risk-taking levels ticked higher. 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 1.3953 lows after opening near 1.4080, and peaking at 1.4173 after the close on Wednesday. The move lower came as WTI crude rallied over 9% to one month highs over $26.70. The risk-on conditions on Thursday have supported the CAD as well. Oil later gave back all its gains, though a round of broad USD selling kept USD-CAD heavy near 1.3980 into the close.

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