Home > XE Currency Blog > XE Market Analysis: Asia - May 14, 2020


XE Currency Blog

Topics7615 Posts7660
By XE Market Analysis May 14, 2020 2:37 pm
    XE Market Analysis's picture
    XE Market Analysis Posts: 5539
    XE Market Analysis: Asia - May 14, 2020

    The Dollar faded lower in morning trade on Thursday, later perking back up in another relatively quiet FX session. The USD shrugged off the higher than forecast jobless claims, and deflationary trade prices, though Wall Street took a dive, before later turning higher. EUR-USD topped at 1.0816 before easing to 1.0780 lows. USD-JPY found a floor at 106.86, later peaking over 107.20. USD-CAD was pushed and pulled by wide swings in oil prices, ultimately dropping under 1.4070 from highs over 1.4140. Cable hit a one-month low of 1.2166, subsequently bouncing over 1.2215.

    [EUR, USD]
    EUR-USD bottomed at one-week lows of 1.0775 in early N.Y. trade, later rising to 1.0816 in light trade. Economic fundamentals remain bleak on both sides of the Atlantic, with markets continuing to look through the data. Big picture, the pairing remains inside of recent trading ranges, and until a clearer view of the re-opening of economies becomes evident, more of the same is anticipated. The 20-day moving average at 1.0847 is resistance, with support at the May 7 low of 1.0767.

    [USD, JPY]
    USD-JPY hit N.Y. session lows of 106.86, down from pre-open highs of 107.10. Risk-off conditions, as evidenced by sharply lower equities, and lower Treasury yields weighed on the pairing early on. Fed chair Powell's "significant downside risks" comment on Wednesday carried forward to Thursday, while the higher than expected jobless claims underscored the impact the pandemic is having on the economy. Later, as risk aversion faded, USD-JPY traded back over 107.20. USD-JPY support is at Wednesday's 106.75 low.

    [GBP, USD]
    Cable printed 1.2166 lows in early N.Y. trade, levels last seen on April 7. The downward trajectory has approximated a decline in global stocks, to which the UK currency has developed a quite close correlation with during the pandemic crisis era so far. The UK's high infection rate of the coronavirus, and high death total, has meant the country is behind the pack in terms of reopening its economy. The UK government's extension of the job retention scheme, through to October, while more generous than many other countries, is projected to cost a massive GBP 12 bln per month, which is also raising concerns. Overall, given this backdrop, and the dollar's safe-haven status, there is a risk of Cable revisiting sub-1.2000 levels.

    [USD, CHF]
    EUR-CHF was held to narrow ranges in the low 1.05s on Thursday. 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 rallied to one-week highs of 1.4141, up from pre-open lows of 1.4069. The better than $1/bbl drop in oil prices supported, with WTI crude basing at $25.69 in early trade. Ugly Canada manufacturing data supported as well. General USD strength underpinned the pairing, with safe-haven flows into the greenback noted in morning trade, as risk-off conditions prevailed. Later, as oil prices moved higher, USD-CAD pulled back under 1.4070. The May 7 high of 1.4173 is the next upside target, with support at the 50-day moving average at 1.4061.

    Paste link in email or IM