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By XE Market Analysis September 11, 2020 2:59 pm
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    XE Market Analysis: Asia - Sep 11, 2020

    The DXY was modestly higher in N.Y. on Friday, heading from 93.10 lows to 93.38 high in light trade. Warmer August CPI helped USD sentiment, but most major Dollar pairings plied relatively narrow ranges. The greenback found some safe-haven buying into the weekend, as Wall Street squandered early gains. Losses again were led by tech selling. Treasury yields ended down about 1 basis point lower across the curve. EUR-USD eased from pre-open highs of 1.1873 to 1.1827 in afternoon trade. USD-JPY was range bound between 106.06 and 106.21. USD-CAD rallied from 1.3171 to 1.3207 highs, while GBP-USD eased from 1.2830 to 1.2775. Markets will shift attention to the FOMC meeting next week, where no change in policy is expected. Focus will be on the Fed's updated forecast projections. We expect upward revisions to the 2020 growth outlook, downward revisions to the unemployment rate, and upward bump to PCE inflation.

    [EUR, USD]
    EUR-USD pulled back from pre-open highs of 1.1874, bottoming in late morning N.Y. trade at 1.1828. The pairing remains inside of Thursday's trading band, and will likely stay that way into the close. EUR-USD gains seen Thursday following a less dovish than expected ECB announcement were short lived, as Lagarde indicated there was no need to overreact on the currency strength for now. The pairing is set to end the week virtually unchanged. Support now is at Wednesday's 1.1753 low, with resistance at 1.1917, Thursday's high.

    [USD, JPY]
    USD-JPY has rallied modestly from early lows of 106.09, peaking at 106.21 in very light Friday trade. Risk-on conditions have offered a modicum of support. The pair has largely been stuck between its 20-day moving average at 106.03 and its 50-day moving average at 106.29 since Thursday. USD-JPY has been in a consolidation stage for a couple of weeks now, and a move over 106.55 or under 105.79 will be needed to shift market sentiment on direction. As Wall Street sold off in afternoon trade, USD-JPY headed back t o106.06 lows.Meanwhile, Japan's ruling LDP party will hold elections to pick the next Prime Minister on Monday. Chief cabinet secretary Yoshihide Suga is the leading contender to win the LDP party election and take over for PM Abe, who announced he was stepping down. Suga has pledged continued support for Abenomics, which should temper any market reaction.

    [GBP, USD]
    The Pound was back under pressure, with Cable down 100 points at 1.2763 ahead of the N.Y. open from its rebound high at 1.2863. The pairing steadied between 1.2830 and 1.2775 through the session. Brexit uncertainty continues to drive Sterling's direction, with a no-deal exit to impact the majority of UK trade. The EU called the UK government's bluff, demanding it scrap plans to overwrite parts of the Withdrawal Agreement by the end of the month or risk jeopardizing trade talks. Other pound negatives include confirmation that the government wage support will end in October, and plans to dramatically ramp up coronavirus testing levels, which will amplify false positive results and risk leading to more restrictions.

    [USD, CHF]
    EUR-CHF has ebbed back to familiar levels in the mid 1.0700s after the latest drop back from forays above the 1.0800 level. The cross has repeatedly failed to sustain gains above 1.0800 over the last couple of months. The influence of the SNB's intervening hand may have been at play during the recent upside bursts.

    [USD, CAD]
    USD-CAD was relatively steady in North American trade on Friday, idling between 1.3171 lows and 1.3194 through the morning, later topping at 1.3207. The pairing ranged between Monday's low of 1.3049 and Wednesday's 1.3260 high this week, with the CAD remaining under some pressure as oil prices appear to be settling inside a lower trading band than seen during the prior month. USD-CAD held above the 20-day moving average at 1.3147 overnight, though a modest WTI crude rally through the morning session should limit further gains into the weekend.

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