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By XE Market Analysis October 27, 2020 1:57 pm
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    XE Market Analysis: Asia - Oct 27, 2020

    The Dollar maintained a slightly easier bias in N.Y. on Tuesday, though trading ranges were relatively narrow overall. The DXY fell from the 93.13 highs seen overnight, later basing at 92.79 in early afternoon. Incoming data saw durable orders rise more than expected, housing prices beat expectations, and the Richmond Fed index improve more than forecasts. None of the releases had much impact on markets. Wall Street was mixed, with the NASDAQ outperforming, while Treasury yields edged lower. The usual concerns kept markets on edge, with Covid, stimulus and next week's election all in the middle of the radar screen. EUR-USD made its way from near 1.1820 at the open to 1.1839 before turning sideways. USD-JPY was heavy, falling from near 104.70 to 104.39 lows. USD-CAD fell from 1.3185 to lows under 1.3145. GBP-USD advanced from early lows of 1.3023 to 1.3080.

    [EUR, USD]
    EUR-USD bottomed at 1.1796 in London morning trade, just above the 50-day moving average which sits at 1.1795, opened the N.Y. session near 1.1820, before making its way to 1.1839 highs at mid-morning. Prices have been contained through the session, though the Dollar has retained a downward bias, as risk-appetite remained net positive, with both the NASDAQ and S&P 500 holding in the green, while the Dow was modestly underwater. EUR-USD has traded between 1.1880 and 1.1787 for a week now, and will likely consolidate further into Tuesday's U.S. election.

    [USD, JPY]
    USD-JPY remained heavy, so far bottoming at 104.39, down from London highs of 104.84, and Asia's top of 104.89. Talk of Japanese investor Yen repatriation was heard, as global risk aversion picks up on the back of soaring Covid cases. In addition, repatriation may be partly due to the upcoming U.S. election, where the outcome remains uncertain, and subsequent market responses complete unknowns. Last Wednesday's low of 104.34 is next support.

    [GBP, USD]
    Cable bottomed at 1.3023 in early N.Y., coming from earlier highs of 1.3059, before rallying to 1.3080 highs into the London close. Trade negotiations continued in London through to Thursday before relocating to Brussels. They are reportedly working to a mid-November deadline. Fishing appears to be the final stumbling block, but the signs are that a compromise will be reached in this area. With a no deal scenario now looking much less of a risk, the question now is more focused on how limited or how broad a deal might be between the EU and UK. The central criteria for the Pound will be what impact any deal has on the UK's terms of trade.

    [USD, CHF]
    The Swiss franc has been trading with a firming bias, consistently rebounding from bouts of weakness in recent months and driving the EUR-CHF cross to levels under 1.0700 last week for the first time in three months. Markets are anticipating revamped monetary easing measures from the ECB while factoring in Brexit risk. The franc has a proclivity to ascend on the back of its balance of payments position. The SNB stated at its quarterly monetary policy review last month that the franc remains "highly valued" and said it is ready to "intervene more strongly in the foreign exchange market."

    [USD, CAD]
    USD-CAD pulled back from Monday's seven-session high of 1.3225, hitting a low of 1.3157 in early North American trade. General USD softness today weighed on the pairing, while a partial recovery of Monday's oil price declines aided the CAD some as well. WTI crude remains soft overall though, which should limit USD-CAD downside going forward. A modest uptick in WTI crude later saw USD-CAD print a low under 1.3150.

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