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By XE Market Analysis November 23, 2020 2:31 pm
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    XE Market Analysis: Asia - Nov 23, 2020

    The Dollar turned broadly higher in N.Y. on Monday, with the better Markit PMI outcomes providing the main driver. USD Short-covering was noted after the unit tumbled through much of the month of November. The DXY recovered from near three-month opening lows of 92.02 to 92.80. In addition, firmer Treasury yields gave some support to the Greenback. More positive vaccine news appears to have helped, as the FX market begins to look through the current spike in Covid cases to the spring when widespread vaccine distribution is expected, which will mark the beginning of the end of the pandemic. Wall Street was higher as well. EUR-USD fell from just over 1.1900 at the open to 1.1800, while USD-JPY rallied from 103.70 to 104.64. USD-CAD headed from 1.3047 to 1.3113, while GBP-USDD pulled back from near three-month highs of 1.3398 to 1.3264.

    [EUR, USD]
    EUR-USD printed a seven-session low of 1.1800 in N.Y. morning trade, down from 1.1906 seen at the open, and marking the pairing's biggest down day in two-weeks. Better U.S. PMIs came to the Greenback's aid, and USD short-covering was reportedly a factor across all the major USD pairings. Next EUR-USD support comes at the 20-day moving average, currently at 1.1792, then the 50-day moving average at 1.1775. Resistance is at the earlier 1.1906 peak, then the November 9 high of 1.1920.

    [USD, JPY]
    USD-CAD rallied on Monday, as the USD made broad gains. After opening at 1.3047, the pairing made its way to 1.3113 highs. Oil price gains along with a broadly weaker Greenback overnight saw USD-CAD under modest pressure. WTI crude traded over the $43 mark, while the DXY hit near three-month lows of 92.02 before recovering. More good Covid vaccine news helped the CAD some early on, though a broad round of USD short-covering later took the pairing higher.

    [GBP, USD]
    Dollar gains drove Cable lower following strong U.S. data, which highlighted a notable growth advantage of the U.S. economy relative to the UK and European economies. Cable printed a near three-month high of 1.3398, later falling to 1.3264. Of note, the UK's preliminary November services and manufacturing data produced a much less severe drop in the composite reading than had been expected, though still signaled a contraction in economic activity.

    [USD, CHF]
    EUR-CHF rallied to seven-week highs of 1.0828 in N.Y. last Monday, on the back of the Moderna vaccine news, which saw risk-taking levels surge, putting downward pressure on the haven CHF. The cross steadied on either side of the 1.0800 mark this Monday, with moderate risk-on 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 fell from nearly 1.3060 to 1.3039 in the aftermath of the better Canada retail sales outcome. In addition, a generally weaker USD, along with continuing relatively firm crude oil prices supported the CAD. USD sentiment has soured of late, with market narratives calling for more downside in the New Year, with further easing by the Fed in the form of additional asset purchases likely to weigh on the USD. Into the weekend however, short covering prevailed, taking USD-CAD back to 1.3090 in afternoon trade.

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