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By XE Market Analysis May 27, 2020 2:55 pm
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    XE Market Analysis: Asia - May 27, 2020

    The DXY headed lower into the N.Y. open on Wednesday, weighed down by risk-on conditions, which took the bid out of the safe-haven Dollar. Buyers stepped back in after the open, as Wall Street turned mixed. There was little in the way of data, though the Richmond Fed index, while still in negative territory, perked up more than expected. Thursday's data picks up with revised GDP, jobless claims, and factory orders. EUR-USD headed back below its two-month highs of 1.1030, later bottoming under 1.0970. USD-JPY turned lower after attempting to test the 108.00 level, falling back to 107.64 in afternoon trade. USD-CAD bounced from 11-week lows at 1.3725 to highs of 1.3822 as oil prices stumbled. GBP-USD was heavy through the session, basing at 1.2205 from opening highs of 1.2314.

    [EUR, USD]
    EUR-USD rallied to near two-month highs of 1.1030, briefly crossing above the 200-day moving average at 1.1012. The rally from London lows of 1.0934 came as risk appetite perked up on reports the EU is moving closer to finalizing a massive recovery fund, along with hopes for extra ECB stimulus. the pairing has struggled over the 1.1000 mark since the start of April, and has not settled above its 200-day moving average since March 27. A close above the level will be taken as a bullish sign, though currently, EUR-USD is back under 1.1000 mark.

    [USD, JPY]
    USD-JPY was capped ahead of the 108.00 mark, though managed a six-session high of 107.94 in early N.Y. trade before slipping back to 107.64. The pairing had come from overnight lows of 107.36. Psychological resistance at 108.00, along with the 50-day moving average at 107.92, and Wall Street pulling back from best levels, appeared to have prompted a light bout of profit taking. The overnight low is the next support level.

    [GBP, USD]
    Cable recorded an inside day on Wednesday, falling from London morning highs of 1.2354 through the N.Y. morning, and eventually basing at 1.2205.Given the late start the U.K. got on battling the virus, the economic outlook looks to be behind some of the other big countries, which for now, should keep the Pound from making its way much higher. Support now is at Tuesday's 1.2179 low, with resistance at 1.2364, Tuesday's high.

    [USD, CHF]
    EUR-CHF rallied to near three-month highs of 1.0698 before fading to near 1.0630. The risk backdrop deteriorated some during the N.Y. session putting pressure on the cross. 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. A rise in sight deposits (money held by commercial banks) can suggest the francs turning up after being sold by the central bank. The 1.0500 level in EUR-CHF, while not a fixed floor, has clearly been a line in the sand of the SNB.

    [USD, CAD]
    USD-CAD bounced from 11-week lows of 1.3725 seen ahead of the open, since peaking at 1.3822. The move higher came on the back of reports that Russia seeks to ease current production cuts in July, which weighed on oil prices, taking WTI crude to $32.20 lows from $33.80. With economies beginning to reopen, oil demand is set to increase, which should keep WTI prices generally supported, keeping downward pressure on USD-CAD overall.

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