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By XE Market Analysis November 13, 2020 2:50 pm
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    XE Market Analysis: Asia - Nov 13, 2020

    The Dollar was modestly lower in N.Y. trade on Friday, resulting in the DXY falling from lows of 92.91 to 92.75 in early afternoon. Major Dollar pairings were largely held to narrow trading bands, but risk-on conditions weighed fairly broadly on the safe-haven Greenback. Wall Street rallied, with markets holding out hope for a Covid vaccine sooner rather than later, and apparently looking through the current virus spikes seen in the U.S. A number of vaccine candidates could be ready for partial distribution by year-end, though it will take months for a widespread distribution to be completed. Treasury yields were little changed. Incoming U.S. data saw headline October PPI a bit warmer than forecasts, while the U. Michigan sentiment index was softer than expected. Neither report had much influence on markets. EUR-USD rallied from 1.1808 lows to 1.1833, while USD-JPY eased from 104.93 to 104.57. USD-CAD bucked the trend, rallying to 1.3173 from early lows of 1.3127. GBP-USD meanwhile, topped at 1.3192, up from mid-morning lows of 1.3150.

    [EUR, USD]
    EUR-USD moved from early lows of 1.1808 to 1.1833 at mid-afternoon on Friday, with narrow ranges persisting amongst most major Dollar pairings. The risk-on backdrop has kept modest pressure on the USD through the session, though looking ahead, risk-on is not necessarily likely to become a regular feature given the rise in Covid cases, hospitalizations, and deaths. Additional lockdowns in Europe and the U.S. are expected to continue to crimp the economic outlook, perhaps weighing on the risk-backdrop. Of note, Biden Covid advisor is mulling a 4-6 week U.S. shutdown. For now, recent EUR-USD ranges between about 1.1900 and 1.1750 should hold up.

    [USD, JPY]
    USD-JPY hit four-session lows of 104.57 at late-morning, down from 104.91 at the open, and overnight highs of 105.15. Narrow ranges have been the case on Friday for most Dollar pairings, with the Greenback overall under modest pressure given the risk-on backdrop. The pairing has traded under its 20-day moving average at 104.72, which may attract some short-covering related buying into the London close and the weekend.

    [GBP, USD]
    GBP-USD rallied from 1.3150 at mid-morning to 1.3192 highs after the London close. The pairing had come from overnight lows of 1.3109 seen in Asia. Several factors appeared to be at play. One was equity market gains, which generally weighed on the haven USD. Another factor was the political developments on Downing Street, with the departure of the government's director of communications, and news that Dominic Cummings will leave his advisory role by Christmas, being read as a weakening in the influence of the 'Vote Leave' campaigners, meaning there could be a softer, more pragmatic attitude to Brexit, although it is not yet clear what shape the new administration set-up will take. As for the ongoing negotiations, there is still no breakthrough with only about a week to go to the 'final' deadline.

    [USD, CHF]
    EUR-CHF rallied to six-week highs of 1.0808 in N.Y. on Monday, on the back of the Pfizer vaccine news, which saw risk-taking levels surge, putting downward pressure on the haven CHF. The pairing rallied better than 100 points from lows. EUR-CHF has struggled to hold the 1.0800 level since the summer, and will likely remain altitude limited going forward unless the risk-backdrop holds up. The pairing headed back over 1.0800 on Friday, as stocks rallied. In addition, the cross will remain under pressure should the ECB embark on further easing in December.

    [USD, CAD]
    USD-CAD bounced from London lows of 1.3117 to 1.3148 at the open. The pairing had peaked at 1.3170 during the Asian session and later topped at 1.3173 in light afternoon dealings.. Softer oil prices limited USD-CAD downside, as WTI headed to within 15 cents of the key $40 mark. Risk-on conditions and a subsequently lower USD overall have capped USD-CAD gains, and a combination of the two could keep USD-CAD rangebound into the weekend.

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