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By XE Market Analysis May 15, 2020 2:38 pm
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    XE Market Analysis: Asia - May 15, 2020

    The Dollar fell early in the N.Y. Friday session, as sellers stepped in following the abysmal U.S. retail sales and industrial production data. The DXY fell from 100.49 to 100.09, though later rebounding to 100.47 highs on pre-weekend USD short covering. Wall Street sold off at the open on the back of ramping up tensions between the U.S. and China, though later turned positive as the U.S. rolled out a coronavirus vaccine project. EUR-USD rallied from 1.0790 to 1.0850 early, later falling back to lows under 1.0805. USD-JPY touched 106.86 lows after the data, before heading to 107.37. USD-CAD dipped under 1.4055, before rallying to 1.4114 highs, while GBP-USD printed two-month lows of 1.2115.

    [EUR, USD]
    EUR-USD was again range bound on Friday, remaining inside of the week's trading band. The Euro gained some ground following the horrible U.S. retail sales and industrial production, heading to 1.0850 highs from opening lows near 1.0790, though later settled back under 1.0810 after the London close. 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.

    [USD, JPY]
    USD-JPY rallied to N.Y. session highs over 107.35, up from post-retail sales lows of 106.86. Pre-weekend short covering was a driver behind the modest move higher, which was limited by today's risk-off backdrop. Losses earlier in the week came as Treasury yields sagged after Fed Chair Powell painted a glum economic picture going forward. Overall, USD-JPY has remained inside an about 106.00 to 108.00 trading band for the better part of a month, and until markets get a better picture of how global economies re-open, the pairing is liable to remain range-bound.

    [GBP, USD]
    The Pound underperformed, once again proving sensitive to selling in U.S. and global stocks. Cable dropped by over 0.5% in printing its lowest level since March 26th, at 1.2114. Cable has now racked up a fifth consecutive day of lower lows. The UK's high coronavirus infection rate, and high death total, has meant the country is behind the pack in terms of reopening its economy. This, along with the UK's open economy and high current account deficit and the continued risk of the UK leaving at year-end the post-Brexit transition membership arrangement of the EU's single market has elevated the pound as a favored major-currency short recommendation

    [USD, CHF]
    EUR-CHF was held to narrow ranges in the low 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 edged back from its early 1.4110 high, basing at 1.4055 before heading back to 1.4114. Two-month oil price highs over $29/bbl limited USD-CAD gains, while risk-off conditions put a floor under the pairing. Ahead of Monday's Victoria Day holiday in Canada, USD-CAD activity is liable to dry up early. Support remains at Wednesday's low of 1.4007, with resistance at Thursday's high of 1.4114.

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