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By XE Market Analysis November 19, 2020 2:26 pm
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    XE Market Analysis: Asia - Nov 19, 2020

    As was the case on Wednesday, the Dollar attempted to rally early, though ultimately ran out of gas and later turned modestly lower on the session. The DXY topped at 92.68 before falling to 92.45 lows. Incoming data was mostly better than expected. Initial claims were higher than forecasts, though continuing claims fell sharply. Existing home sales rose to levels last seen in 2005 while leading indicators were in line, and the Philly Fed index fell less than expected. Wall Street was mixed, with rising virus concerns seeing the stay-at-home stocks (tech) outperform. Rising Covid cases, hospitalizations, and deaths have largely offset recent good news on the vaccine front, as it will be months before populations are immunized. Treasury yields were lower. EUR-USD bottomed at 1.1819, later rallying to 1.1851. USD-JPY peaked at 104.09 before making its way to 103.79 lows. USD-CAD fell from 1.3117 to 1.3070, while GBP-USD topped at 1.3242, up from early lows of 1.3196.

    [EUR, USD]
    EUR-USD opened just over 1.1840, later dipping to 1.1819, then spending the remainder of the session heading higher, peaking at 1.1851 after the London close. The lack of progress between the EU and U.K. on Brexit trade talks has likely kept a cap on the Euro, despite generally souring USD sentiment. EUR-USD remains under highs of the week seen Tuesday and Wednesday, with the 1.1900 level appearing to have become solid resistance. Support comes at the 50-day moving average, which currently sits at 1.1775.

    [USD, JPY]
    USD-JPY remained above Wednesday's eight-session low of 103.65, touching 103.74 in Asia before rallying to 104.22 into the N.Y. open. Since then, the pairing edged to 103.79 lows. The Dollar overall has remained relatively stable through the session, though with a downward bias stepping in from earlier in the session. Softer Treasury yields amid moderately risk-off conditions weighed on USD-JPY, and bigger picture, USD sentiment has soured some most recently, as the Fed's ZIRP and asset purchases could keep pressure on the Greenback in the coming months, especially should the economy recover more quickly due to the Covid vaccine rollout..

    [GBP, USD]
    Cable lost come ground through the N.Y. morning session, easing from 1.3265 to 1.3196, later recovering over 1.3250. Fishing rights and level playing field rules remain the stumbling blocks in Brexit trade talks, and neither side is showing any sign of wanting to make any concessions. The London Times cited an EU diplomat saying that the EU is drawing up emergency no-deal plans and that some member states are demanding they be published immediately, sending a signal of resolve to the UK government. Time really is running out now given the time needed for the ratification process before the UK's exit from the common market and customs union on January 1. It would be imprudent to rule out the risk of a no-deal, but we still expect that win-win will prevail rather than lose-lose and that an accord will be reached. Sterling is not out of the woods just yet.

    [USD, CHF]
    EUR-CHF rallied to seven-week highs of 1.0828 in N.Y. on Monday, on the back of the Moderna vaccine news, which saw risk-taking levels surge, putting downward pressure on the haven CHF. The cross eased back under 1.0800 on Thursday, with moderate risk-off conditions prevailing. 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. In addition, the cross will remain under pressure should the ECB embark on further easing in December.

    [USD, CAD]
    USD-CAD was relatively steady, ranging between 1.3070 and 1.3117 since the North American open, and between 1.3123 and 1.3076 on an intraday basis. Relatively firm oil prices limited upside movements, while what turned out to be a risk-off session kept a floor under the pairing. The 20-day moving average at 1.3142 marks resistance now, with support at Wednesday's 1.3034 base.

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