Home > XE Currency Blog > XE Market Analysis: Asia - Sep 09, 2020


XE Currency Blog

Topics7440 Posts7485
By XE Market Analysis September 9, 2020 2:56 pm
    XE Market Analysis's picture
    XE Market Analysis Posts: 5364
    XE Market Analysis: Asia - Sep 09, 2020

    The DXY pulled back in N.Y. trade on Wednesday, after printing a one-month high of 93.65 ahead of the open. The index bottomed at 93.15 in late morning trade. Wall Street rallied sharply, with tech sector buying leading the charge, as investors were quick to step back in after the NASDAQ corrected 10% over the past few sessions from recent highs. . The risk-on conditions weighed on the Dollar, as safe-haven flows were unwound to a degree. EUR-USD rallied to 1.1834 from early lows of 1.1755, while USD-JPY was rangebound between 106.10 and 106.27. USD-CAD fell to 1.3155 lows from near 1.3230 at the open. GBP-USD made its way from under 1.2890 to near 1.3020.

    [EUR, USD]
    EUR-USD headed to 1.1834 highs from 1.1870 following a Bloomberg report that the ECB has become more confident on its current economic projections. The pairing had printed one-month lows of 1.1753 into the N.Y. open. The Euro had been under pressure ahead of Thursday's ECB meeting, with market participants looking for a dovish tilt to the statement. This report may have thrown cold water on that idea, allowing EUR-USD to rebound.

    [USD, JPY]
    USD-JPY opened near 106.10, later rallying modestly to 106.27 highs. The pairing had bottomed at a seven-session low of 105.79 during the London morning session. Risk-on conditions returned on Wednesday allowing the risk-sensitive Yen to move lower, though ranges were contained. Risk taking levels will continue to drive USD-JPY direction. Support is now at the September 1 low of 105.59, with resistance up at 106.35, which is the 50-day moving average.

    [GBP, USD]
    Cable hit a six-week low of 1.2885 in early N.Y. trade, down from overnight highs near 1.3160. The UK government published its controversial Internal Markets Bill today, which will override parts of the EU Withdrawal Bill. This proposed legislation has greatly raised the odds for the UK leaving the EU's single market without a new deal, and has weighed heavily on Sterling. The Bill will give ministers the power to tweak protocols that affect Northern Ireland trade with the rest of the UK, and will also enhance the UK's state aid autonomy -- which is inharmonious with the EU's regime for limited state aid. This has put the UK on a crash course with Brussels. Further downside would appear to be in the cards for the Pound. Cable later bounced back over 1.3015.

    [USD, CHF]
    EUR-CHF fell from one-week highs of 1.0846 in N.Y. on Tuesday, bottoming at 1.0805. The cross again failed to hold the 1.0800 handle on Wednesday, with follow through selling resulting in a low of 1.0746 . This pattern of losing ground from the mid 1.08s has been repeating for about six weeks now. Robust manufacturing data from most key global economies, and global stock market gains may have also helped weaken the low beta, safe haven Swiss franc.

    [USD, CAD]
    USD-CAD hit near four-week highs of 1.3260 overnight, with CAD weakness coming on the heels of oil hitting near three-month lows on Tuesday. The pairing opened the North American session near 1.3220 and later dipped to 1.3155 lows following the BoC announcement, where policy was left unchanged, with rates at 0.25%, as expected. The statement said "As the economy reopens, the bounce-back in activity in the third quarter looks to be faster than anticipated in July", supportive of the CAD, though cautioned that the "Bank continues to expect the recuperation phase to be slow and choppy as the economy copes with ongoing uncertainty and structural challenges."

    Paste link in email or IM