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By XE Market Analysis September 21, 2020 2:40 pm
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    XE Market Analysis: Asia - Sep 21, 2020

    The Dollar had its best day in a while in N.Y trade on Monday, taking tie DXY to six-week highs of 93.78 from overnight lows of 92.75. Safe-haven USD buying was widespread, as global equities melted down on the back of rising virus cases in much of Europe, the lack of progress on U.S. stimulus, the potential for a U.S. government shutdown at the end of the month, and heightened U.S. political combativeness. There was no U.S. data of noted. Wall Street was sharply lower, leaving the DJIA down nearly 1,000 points early on. Treasuries rallied on safe-haven buying taking yields substantially lower. EUR-USD hit six-week lows of 1.1732, down from overnight highs of 1.1872, while USD-JPY topped at 104.90, up from six-month lows of 104.00. USD-CAD ran up to 1.3320 highs from 1.3171, while Cable bottomed at 1.2776, down from London highs of 1.2966.

    [EUR, USD]
    EUR-USD fell to six-week lows of 1.1732 in N.Y. trade, down from the four-session high of 1.1872 seen overnight. The Dollar has benefited from safe-haven buying through the N.Y. session, as risk taking levels implode on the back of geopolitics, and COVID. The Euro has likely suffered from the alarming growth rate of new virus cases through the EU, with France in particular reporting more than double the cases it saw at the previous peak back in April. Cases are rising in Germany and Italy as well, leading to calls for further restrictions or lockdowns ahead. This week's series of flash September PMIs throughout Europe may prove to be the key for the Euro's next big move.

    [USD, JPY]
    USD-JPY bounced from six-plus month lows of 104.00, peaking in N.Y at 104.90 in N.Y. trade. The pairing had fallen from Asian highs over 104.85, as the risk-sensitive Yen rallied as equities fell. Since then however, it appeared the demand for safe-haven Dollars trumped, as the USD overall headed sharply higher during the N.Y session on the back of myriad issues, including rising global COVID rates, U.S. political uncertainty, the lack of new U.S. fiscal stimulus, China tensions, etc. USD-JPY resistance is now at the psych 105.00 level.

    [GBP, USD]
    Cable fell from 1.2966 highs seen in early London, to a low of 1.2776 after the London close, just above the two-month low seen September 11 at 1.2763. In the UK, coronavirus cases and corona-panic are surging. Localized lockdowns are now affecting 10 million people in the UK, and the government is set to announce further restrictions, including the possibility of a another full national lockdown. This is a negative backdrop for the pound as it combines with the uncertainty surrounding the Brexit endgame, and with the minutes from the BoE MPC meeting last week affirming that the central bank is at full steam on contingency planning for negative interest rates. Cable looks to have further downside potential left

    [USD, CHF]
    EUR-CHF retreated from near the 1.0800 mark to under 1.0745 in N.Y. on Monday, with the CHF showing its safe-haven bona fides as a global risk-off session impacted. EUR-CHF has ebbed back to familiar levels in the 1.0700s after failing to hold over the 1.0800 level since August. The influence of the SNB's intervening hand may have been at play during the recent upside bursts.

    [USD, CAD]
    USD-CAD rallied to six-week highs of 1.3320, up from overnight lows of 1.3171. The 5-plus percent fall in WTI crude to under the $39/bbl level was the driver of CAD weakness, though broad risk-off conditions weighed as well, as the USD benefits from safe-haven flows. As with many countries, Canada COVID cases have been on the rise of late, which has led this past weekend to new government mandated reductions in gathering sizes in Ontario and Quebec, and could lead to further lockdowns, putting further pressure on the CAD. USD-CAD has moved above its 50-day moving average (1.3272) for the first time since May, and the level now becomes support.

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