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By XE Market Analysis October 2, 2020 4:25 pm
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    XE Market Analysis: Asia - Oct 02, 2020

    The Dollar rose slightly in early N.Y. trade on Friday, after trading mostly lower overnight following the news of President Trump's positive Covid diagnosis. The September jobs report saw NFP come in lighter than expected, though prior-month upward revisions that left a combined gain near consensus forecasts. The data helped the Greenback modestly, though gains were limited into the weekend. The DXY moved from early lows of 93.70 to highs of 93.93. Wall Street opened sharply lower on the Trump news, though encouraging words on stimulus from Speaker Pelosi later saw losses pared. Treasury yields ended modestly higher. EUR-USD traded between 1.1734 and 1.1734, closing near the middle of the range. USD-JPY recovered from early lows of 105.12, topping at 105.40, while USD-CAD peaked at 1.3331, later touching 1.3295. GBP-USD recovered to 1.2946 from early lows of 1.2893.

    [EUR, USD]
    EUR-USD was range bound but choppy through the N.Y. session, peaking at 1.1734 after the ADP jobs report, before soon after, bottoming at 1.1699. The pairing has remained inside that range since. The backdrop remains uncertain on both sides of the Atlantic, with the U.S. politics in disarray, and now Trump's Covid diagnoses and along with gridlock on fiscal aid sowing uncertainty. In Europe, rising Covid cases, with accompanying restrictions and localized lockdown have put some doubt into an economic recovery there. As a result, EUR-USD has been in consolidation mode for much of the week.

    [USD, JPY]
    USD-JPY recovered some from the eight-session lows of 104.94 seen following the Trump Covid tweet, bouncing to 105.39 through the N.Y. Morning session. The pairing fell quickly on the news, dropping from the 105.55 region. The risk-sensitive Yen found buyers on the news, though with Trump showing "mild" Covid symptoms so far, markets have steadied some since the initial Wall Street drop, allowing USD-JPY to recover some.

    [GBP, USD]
    The Pound outperformed on Friday, taking Cable from overnight lows of 1.2837 to 1.2954 highs into the N.Y. open. GBP-USD was fairly steady through the N.Y. session. News that UK Prime Minister Johnson and European Commission President von de Leyen will be holding a video call on Saturday was generally taken as positive. The call will mark the beginning of the end of the Brexit endgame, although an ongoing and evolving future relationship negotiation, including on trade, will likely continue long after the UK leaves the single market at year end. We expect a deal will be made, and now see a no-deal scenario as very unlikely, but see a 'bare bones' deal as probable. Still some risk for Sterling, but the picture has brightened some in recent days.

    [USD, CHF]
    EUR-CHF printed three-week highs of 1.0830 in N.Y. on Monday, though was unable to hold up, later falling to 107.75 lows. The pairing continues to struggle over the 1.0800 level, as it did again on Friday. The SNB left policy setting unchanged last week, with the deposit rate and Libor target still at -0.75%. The central bank repeated that the franc is "highly valued" and said the bank is ready to "intervene more strongly in the foreign exchange market". The cross had been near 107.65 ahead of the Bank announcement Thursday, initially rallying to 1.0790, then later in N.Y. to its highs. Markets wonder if the SNB had a hand in the move over 1.0800.

    [USD, CAD]
    USD-CAD traded to 1.3331 high in early North American trade, up from Thursday's near two-week low of 1.3267. Another slide in oil prices was the driver this morning, with WTI crude trading to near four-week lows at $36.63. Risk-off conditions have provided some support as well, though with stocks and oil prices now off their worst level, USD-CAD largely consolidated through the remainder of the session, moving off its highs as oil prices bounced slightly.

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