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By XE Market Analysis May 13, 2020 2:36 pm
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    XE Market Analysis: Asia - May 13, 2020

    The dollar was mostly higher in N.Y. on Wednesday, gaining ground on safe-haven flows following Fed chair Powell's downbeat economic outlook in the face of the pandemic. In addition, Powell down played the prospects of negative interest rates, which was supportive of the USD. Incoming PPI was much cooler than expected, though had little impact on the market. EUR-USD faded from highs over 1.0890 to 1.0812 lows. USD-JPY ranged between 106.74 and 107.15, while USD-CAD topped over 1.4100 from from 1.4006 lows. GBP-USD printed a one-month low of 1.2210. Thursday brings weekly jobless claims, which are expected to rise another 2.50 mln versus the 3.169 mln the previous week. April trade prices are due as well.

    [EUR, USD]
    EUR-USD faded from early highs of 1.0896, easing into 1.0830 lows into the London close, and later to a base of 1.0812. As was the case on Tuesday, sellers emerged ahead of the 1.0900 level, which is regarded as a psych resistance point. Big picture, the pairing remains inside of recent trading ranges, and until a clearer picture of the re-opening of economies becomes evident, more of the same is anticipated. Support is at Tuesday's low of 1.0785.

    [USD, JPY]
    USD-JPY reclaimed the 107 handle, heading to 107.15 highs after touching 106.74 lows earlier in the session. The modest gains came after Fed chair Powell downplayed moving to negative interest rates. Trade has remained quiet and range bound overall, with USD-JPY well inside of the trading range seen this week. The 20-day moving average at 107.15 has capped gains for the time being.

    [GBP, USD]
    The Pound largely shrugged off the dismal UK data, with markets long-since desensitized to bad economic figures. UK preliminary Q1 GDP contracted 2.0% q/q while March industrial production contracted 4.2%. Cable edged out a one-month low at 1.2210. The bearish global equity markets has translated to Sterling weaknes, which has developed a quite strong positive correlation with stock market direction during the pandemic era to far.

    [USD, CHF]
    EUR-CHF was held to narrow ranges in the low 1.05s on Wednesday. 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 was range bound in the session, stuck between 1.4006 st the open, and 1.4060 highs. The pairing wass later on the rise, as WTI crude prices pull back to near $25.10 from post-inventory highs of $26.44. The pairing eventually topped at 1.4105. In addition, the USD has found some support following comments from Fed chair Powell, who, along with some of his colleagues on Tuesday, downplays the chances for negative interest rates in the U.S. The 50-day moving average at 1.4045 is marked as the next support level.

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