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By XE Market Analysis September 22, 2020 2:42 pm
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    XE Market Analysis: Asia - Sep 22, 2020

    The Dollar firmed again in N.Y on Tuesday seeing the DXY trade on the 94 handle for the first time since late July. The index rallied from 93.58 early in the session to 94.07. Incoming data saw existing home sales in line with expectations, and the Richmond Fed index beating forecasts. Bot data points helped the USD at the margins. Wall Street was mixed, while Treasury yields were marginally lower. EUR-USD touched nearly two-month lows of 1.1691, down from opening highs near 1.1760. USD-JPY topped at 105.07, up from near 104.50, while USD-CAD topped at 1.3339, up from early lows of 1.3283. GBP-USD fell from 1.2867 to 1.2711 lows.

    [EUR, USD]
    EUR-USD traded to levels last seen on July 27, bottoming at 1.1691. The pairing was trading near 1.1765 ahead of the N.Y. open. Safe-haven USD buying has picked up again, as Wall Street turned opening gains into modest losses, while second-wave virus concerns hit European countries. France, Germany, Spain and Italy all have seen sharp increases in cases over the past two-weeks, raising concerns of further lockdowns, and the snuffing out of the EU's nascent economic recovery. EUR-USD support is now at the July 27 low of 1.1642, with resistance at the 50-day moving average of 1.1771. Key for the Euro will be the Wednesday release of flash Eurozone and individual country September manufacturing and services PMIs.

    [USD, JPY]
    USD-JPY printed four-session highs of 105.07, as the Dollar wins the safe-haven crown against the risk-sensitive Yen on Tuesday. The pairing opened near 104.50 and has steadily edged higher. USD gains again are broad based on Tuesday, which has seen the DXY cross above the 94.00 level for the fist time since late July. Going forward, given the USD and JPY tend to move in the same direction as risk-taking levels shift, USD-JPY price action will likely remain relatively muted as compared to other Dollar pairings.

    [GBP, USD]
    Cable bounced from two-month lows of 1.2717 in London, topping at 1.2867 into the N.Y. open. The low was seen after BoE Governor Bailey said that "we have looked very hard" at ways of adding further monetary stimulus, including negative interest rates, and the subsequent sharp spike came after Bailey added that last week's note in the minutes from the MPC meeting "did not imply" that the BoE would adopt negative rates. UK PM Johnson announced new national virus restrictions. The rate of positive coronavirus test results has continued to surge in the UK, as has been happening across Europe. The new measures kept pressure on the Pouns, as Cable fell to frsh lows of 1.2711 into the London close.

    [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. Tuesday saw the cross improve to 1.0775 highs, as risk taking levels improved. 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 printed six-week highs of 1.3346 overnight, since easing to 1.3284 lows in early North American trade, as oil prices stabilized. WTI crude had been trading on either side of the $40 mark, after falling briefly under $39 on Monday. Canada reported the most new COVID cases since early May on Monday, raising fears of a second wave of infection. Some provinces this week have taken steps to contain the virus, by limiting gathering sizes. The CAD will likely remain pressured should cases in Canada continue to rise. USD-CAD peaked at 1.3339 in late morning trade.

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