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By XE Market Analysis September 10, 2020 2:57 pm
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    XE Market Analysis: Asia - Sep 10, 2020

    The Dollar started the session on a softer footing in N.Y. on Thursday, as risk-on conditions looked to be in order for the day. ECB chief Lagarde at her press conference was less than dovish in her presser, and for now, remains unconcerned by Euro strength. This saw EUR-USD head higher. In addition, while August U.S. PPI was sa bit warmer than consensus, initial and continuing jobless claims disappointed. This weighed on the Greenback some as well. Wall Street started higher, though eventually turned south, as ongoing anxiety over the virus, uncertainties over a vaccine, concerns over the economy, and jitters over the election all pose significant headwinds for investors. The sell-off in equities then prompted safe-haven USD buying, which saw the DXY recover from 92.70 to 93.23. EUR-USD rallied from 1.1831 to 1.1917 highs, later easing to under 1.1860. USD-JPY was range bound between 105.98 and 106.22. USD-CAD bounced from 1.3129 to 1.3190, while Cable was crushed on new Brexit concerns, falling from 1.3030 into the open to a low of 1.2782.

    [EUR, USD]
    EUR-USD has rallied to a seven-session high of 1.1907, with gains initially coming following U.S. data, and later comments from ECB Lagarde, who said in her press conference that the Eurozone is seeing a "strong rebound", as the bank revised its growth forecast higher. On the Euro, Lagarde indicated there was no need to overreact on the currency strength for now. The September 2 high of 1.1929 us the next upside target.

    [USD, JPY]
    USD-JPY opened near 106.10, later falling to 105.98 lows after the jobless claims miss. Wall Street started on a stronger footing, allowing the pairing to rally modestly to 106.22 highs. From there, risk-off returned, creating demand for both the Dollar and the risk-sensitive Yen, which largely canceled one another out, resulting in USD-JPY ranging between 106.20 and 106.15 through much of the afternoon session. Support remains at the 20-day moving average at 106.06, with resistance at the 50-day moving average at 106.60.

    [GBP, USD]
    Sterling was hammered lower following reports that the EU demands amendments to the U.K. internal market bill. After officials held emergency talks in London today, the EU give the U.K. until the end of the month to amend the bill, which the EU argues constitutes a clear violation of the Brexit Withdrawal Agreement. EUR-GBP has rallied to levels last seen on March 20, topping at 0.9241, and up from London morning lows of 0.9079. Cable meanwhile, has dropped to six-week lows of 1.2781, down from highs near 1.3030 seen into the N.Y. open. Further Brexit upheaval appears to be in the cards which doesn't bode well for the Pound down the road.

    [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 fell from 1.3160 at the North American open to a low of 1.3119 at mid-morning, coinciding with WTI crude's move above the $38.00 mark. Oil had traded to $37.17 after the open. Since then, crude prices took a turn lower, while risk taking levels turned negative. This saw some demand for the safe-haven USD, resulting in a USD-CAD rally to 1.3190. Support now comes at the 20-day moving average at 1.3150, with resistance at Wednesday's 1.3260 high. The pairing will continue to be driven by USD demand and oil prices.

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