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By XE Market Analysis September 23, 2020 2:43 pm
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    XE Market Analysis: Asia - Sep 23, 2020

    The DXY printed two-month highs of 94.30 in N.Y. morning trade on Wednesday, rallying early in the session before turning sideways. Today marked the third straight day of USD gains, which largely came on the back of safe-haven demand. Growing virus threats in Europe, weighing on growth prospects there, along with general market angst on politics, and the uncertain upcoming November election have driven USD inflows. Wall Street was again lower, with tech losses leading. Yields were little changed, however. Fir data, the September Markit manufacturing PMI was slightly improved but had little impact. EUR-USD fell from 1.1705 to 1.1664, as USD-JPY topped at 105.43 from opening lows of 104.00. USD-CAD topped at 1.3377, up from early lows near 1.3325. GBP-USD bucked the trend on short covering, rising to 1.2777 from 1.2715. Wednesday's U.S. calendar brings weekly jobless claims and August new home sales.

    [EUR, USD]
    EUR-USD touched fresh two-month lows of 1.1664 in N.Y. morning trade, down from 1.1690 at the open, and overnight highs of 1.1719 printed during London morning session. Soft European services PMIs released earlier, largely driven by the resurgence of COVID on the continent, have weighed on the pairing. France for example, with overall deaths remaining relatively low, reported over 14,000 new cases on Tuesday, nearly triple the rate seen during the peak of the spring outbreak. Further restrictions and potential for more lockdowns, along with a fresh rebound in general USD sentiment will likely keep EUR-USD contained for now. The pairing later edged up ro 1.1690 highs.

    [USD, JPY]
    USD-JPY printed one-week highs of 105.43 after the London close, with the Dollar again posting gains against most major currencies. The return of risk-off conditions from earlier has seen the DXY edge up to the near two-month highs of 94.30 seen earlier, as the USD continues to find safe-haven buyers. 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 gained a big figure from its London low of 1.2675, a new two-month low, to 1.2777 highs in N.Y. Various media reports, including from the FT and Guardian, said that the UK government is planning to extend, most likely in a modified form, its wage support scheme, which is due to expire next month, and which will be part of a wider emergency support package to help businesses through the new era of Covid restrictions that were announced yesterday, and which may last for six months. The reports inspired market participants to cut out of pound shorts.

    [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. Wednesday saw the cross improve to 1.0784 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 dipped from 1.3356 highs to 1.3322 after the North American open, though though rallied back to six-week highs of 1.3377. Oil prices remained fairly steady near $40/bbl though the morning, and didn't appear to have been a factor in the pairing's recent climb, though the USD generally remains strong, with the DXY earlier printing near two-month highs. An underlying concern, which may be impacting the CAD is the worsening of the pandemic in Canada, where reports indicate new cases rising over 80% over the past two-weeks. PM Trudeau is expected to address Canadians on the virus on TV at 6:30 ET this evening. USD-CAD resistance is at the August 10 high of 1.3395.

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