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By XE Market Analysis May 8, 2020 2:58 pm
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    XE Market Analysis: Asia - May 08, 2020

    After ticking slightly higher following the horrific, but slightly better than expected April employment report, the Dollar pulled back on position squaring driven trade into the weekend. April non-farm payrolls fell 20.5 mln, leaving the unemployment rate at 14.7%. Wall Street moved higher on hopes the economy will slowly come out of lock down. Treasury yields were mixed, with the short end outperforming, steepening the curve. EUR-USD dipped to 1.0815 lows from near 1.0850 after the jobs report, later rebounding to 1.0875. USD-JPY rallied to 106.75 from 106.30, later easing under 106.40. USD-CAD bottomed at 1.3909, from a high of 1.3965, while GBP-USD made its way to 1.2467 from 1.2357.

    [EUR, USD]
    EUR-USD bounced from mid-morning lows of 1.0815, before rallying to four-session highs of 1.0875 into the European close. Conditions were thin as a result of today's London bank holiday, which saw a move from lows to highs with a one-hour period. Pre-weekend short covering was a factor, following relatively sharp losses seen this week. 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 got a boost to 106.72 highs from 106.28 following the U.S. jobs report, which was marginally better than expected. The pairing has since fallen back to 106.40 into the London close, as long positions are pared into the weekend. 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, as it remains unclear to what degree economies can recover, especially with the unknowns of how the virus spread plays out.

    [GBP, USD]
    Cable rallied to 1.2467 at mid-morning, as the Dollar overall came under some pressure. The UK's lockdown is being extended for another three weeks, although with some minor tweaks in what can be seen as baby steps toward reopening. Prime Minister Johnson will detail this in an address on Sunday. The UK currently has the fourth highest number of Covid-19 cases in the world, at 205k, thought by many to be a consequence of a late response to containing the coronavirus and of London being a massively internationally connected hub, which makes the UK particularly exposed to global pandemics.

    [USD, CHF]
    EUR-CHF was held to narrow ranges in the low to mid 1.05s through the week. 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 dipped to seven-session lows of 1.3909 following the ugly, but not as bad as expected Canada jobs report. The pairing since bounced to 1.3964, with the move coming on pre-weekend short covering, driven by WTI crude's inability to trade over the $25 mark, after falling from one-month highs of $26.74 on Thursday. Resistance now comes at 1.4005, the 50-day moving average, with support seen at the 1.3900 level.

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