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Topics7018 Posts7063
By XE Market Analysis April 1, 2020 7:13 am
    XE Market Analysis's picture
    XE Market Analysis Posts: 4942
    XE Market Analysis: North America - Apr 01, 2020

    The dollar and yen have outperformed amid a backdrop of a coursing risk-off theme in global markets, which saw both the pan-Europe STOXX 600 equity index and S&P 500 futrues rack up a loss of around 3%. Asian equity markets also came under pressure. March manufacturing data in Asia and Europe showed sharp contractions as the impact of virus-containing measures starts to impact economic metrics, which comes amid the dawning reality that massive global stimulus measures simply won't be fully effective while many economies remain in a state of lockdown of as-yet unknown duration. AUD-USD tipped over 1% lower in making a five-day low at 0.6051. The Aussie still remains comfortably above the 17-year low that was seen on March 19th at 0.5507. The Kiwi dollar has also taken a tumble, as has the Canadian dollar, with oil prices sinking back toward major-trend lows as crude storage facilities burst at the seems from excessive supplies. USD-CAD gained nearly 1.5% in making a 1.4263 high, though the pair so far has remained below yesterday's peak at 1.4350. The likes of the Norwegian krona, which like the Canadian dollar is an oil-price correlator, and many developing world currencies have also come under pressure. Among the major currencies, EUR-USD posted a six-day low at 1.0918. Cable has also traded softer on the influence of dollar firmness, while USD-JPY has held near net unchanged levels around the 107.50 mark amid concurrent firmness in the yen.

    [EUR, USD]
    EUR-USD breached Monday's 1.0926 low in making 1.1018. The dollar has continued to trade generally firmer, contrasting to last week's pronounced underperformance, though the euro has concurrently been underperforming many currencies. The final March Eurozone manufacturing PMI was revised down to 45.5 in the headline reading, down from 45.8. Markit, the complier of the survey also warned that the numbers, which were higher than originally expected, are overstating actual developments, as delivery times, which usually are a sign of strong demand, boosted the index, but in this instance are far from a positive signal. The recent marked narrowing in the dollar's yield advantage over the Eurozone, driven by the Fed's aggressive monetary policies, looks to have based out for now. The U.S. 10-year T-note versus Bund yield differential troughed last Wednesday at 110.5 bp, since remaining above here, with EUR-USD concurrently coming off the boil. Bigger picture, what the relative political and economic impact that virus-containing measures will have in Europe and the U.S. are unclear, though the issue of the viability of the euro and the EU itself is once again being held in doubt by euroskeptics. The Eurozone countries so-far hardest hit by the virus in Europe -- Italy, Span and France -- have the least fiscal room for manoeuvre. On balance, we remain bearish of EUR-USD.

    [USD, JPY]
    The yen has held net steady against a generally firmer dollar so far today, but has posted gains versus most other currencies amid a backdrop of risk aversion in global markets, which richened the yen's safe haven premium. Asian stock markets fell while S&P 500 futures racked up a 3% decline. Data out of Asia today, including Japan, were nothing short of dismal, showing manufacturing contracting across most of the region, highlighting the economic toll that virus-containing measures are having. The main concern remains that the massive global stimulus measures simply won't be fully effective while many economies remain in a state of lockdown of as-yet unknown duration. While USD-JPY held near net unchanged levels around the 107.50 mark, the likes of AUD-JPY and other commodity-currency yen crosses posted losses of around 1%, while EUR-JPY lost around 0.8%. We continue to anticipate USD-JPY trading at sub-100.00 levels.

    [GBP, USD]
    The pound has come back under pressure against the dollar, euro and yen, while rising versus the underperforming commodity currencies. Cable dipped to a low at 1.2330, but has so far remained above the five-day low seen yesterday at 1.2255. Yesterday's low extended the correction from the 18-day high that was seen last Friday at 1.2486 (which was the culmination of a 9%-plus rebound from the 35-year low that was seen on March 20th at 1.1409). The pound continues to registers as an underperformer on the year-to-date, down by about 7% versus the dollar, and by 5% and 8% down against the euro and yen, respectively. We expect the UK currency will remain vulnerable so long as global markets remain apt to risk aversion, or at least unable to sustain rebounds, which might prove to be the case while there remains uncertainty about the duration major economies will remain in a state of lockdown. The UK's dependency on foreign investment to fund its current account deficit is the Achilles' heel of the pound that is exposed during persisting eras of acute risk aversion in global markets. Brexit also remains a blot on the pound's landscape with Boris Johnson's government aiming to take the UK out of its special transition membership of the EU's customs union and single market at the end of the year, which would put a large part of UK trade on less favourable WTO terms. We think Johnson will ultimately, however, opt for an extension in the transition period.

    [USD, CHF]
    EUR-CHF has continued to gravitate around the 1.0600 level, holding above the five-year low that was seen on March 9th at 1.0505. Assuming the coronavirus crisis persists, as looks highly likely, this should maintain Swiss franc's safe haven premium, which at the least should limit upside scope of EUR-CHF. The U.S. in January added Switzerland to its list of currency manipulators. The move seems a bit rich given the franc is a demonstrably chronically-overvalued currency in purchasing parity terms (as illustrated by the Economist's Big Mac index), though the Trump administration argues that Switzerland needs a more expansive fiscal policy.

    [USD, CAD]
    The Canadian dollar has remained under pressure with oil prices sinking back toward major-trend lows as crude storage facilities burst at the seems from excessive supplies. USD-CAD has gained up nearly 1% in making a 1.4185 high, though the pair so far has remained below yesterday's peak at 1.4350. Crude prices are down by over 65% year-to-date. This level of price decline in Canada's principal export, while it sustains, marks a significant deterioration in the Canadian economy's terms of trade. Given the glut of crude flooding the market, and given that demand will remain weak for a historically protracted amount of time, we anticipate that the Canadian dollar will remain apt to underperformance. USD-CAD revisiting its recent 17-year high at 1.4669 seems likely before long.

    XE Currency Blog

    Topics7018 Posts7063
    By XE Market Analysis April 1, 2020 3:43 am
      XE Market Analysis's picture
      XE Market Analysis Posts: 4942
      XE Market Analysis: Europe - Apr 01, 2020

      Commodity currencies have come under pressure as the winds of risk aversion picked up again. Asian stock markets are lower, while European and U.S. equity index futures are showing losses of around 3%. Data out of Asia today were nothing short of dismal, showing manufacturing contracting across most of the region, highlighting the economic toll that virus-containing measures are having. The main concern remains that the massive global stimulus measures simply won't be fully effective while many economies remain in a state of lockdown of as-yet unknown duration. AUD-USD tipped over 1% lower in making a five-day low at 0.6064. The Aussie still remains comfortably above the 17-year low that was seen on March 19th at 0.5507. The Kiwi dollar has also taken a tumble, as has the Canadian dollar, with oil prices sinking back toward major-trend lows as crude storage facilities burst at the seems from excessive supplies. USD-CAD has gained up nearly 1% in making a 1.4185 high, though the pair so far has remained below yesterday's peak at 1.4350. The likes of the Norwegian krona, which like the Canadian dollar is an oil-price correlator, and many developing world currencies have also come under pressure. Among the major currencies, the dollar has traded firmer again, though has remain below the highs it saw yesterday against some currencies, such as the euro. EUR-USD posted a low at 1.0977, so far remaining above Monday's 1.0926 low. Cable has also traded softer on the influence of dollar firmness, while USD-JPY has held near net unchanged levels around the 107.50 mark amid concurrent firmness in the yen.

      [EUR, USD]
      EUR-USD posted a low at 1.0939, and looks set to breach Monday's 1.0926 low. The dollar has continued to trade generally firmer again, contrasting to last week's pronounced underperformance. The recent marked narrowing in the dollar's yield advantage over the Eurozone, driven by the Fed's aggressive monetary policies, looks to have based out for now. The U.S. 10-year T-note versus Bund yield differential troughed last Wednesday at 110.5 bp, since remaining above here, with EUR-USD concurrently coming off the boil. Bigger picture, what the relative political and economic impact that virus-containing measures will have in Europe and the U.S. are unclear, though the issue of the viability of the euro and the EU itself is once again being held in doubt by euroskeptics. The Eurozone countries so-far hardest hit by the virus in Europe -- Italy, Span and France -- have the least fiscal room for manoeuvre. On balance, we still remain bearish of EUR-USD.

      [USD, JPY]
      The yen has held net steady against a generally firmer dollar so far today, but has posted gains versus most other currencies amid a backdrop of risk aversion in global markets, which richened the yen's safe haven premium. Asian stock markets fell while S&P 500 futures racked up a 3% decline. Data out of Asia today, including Japan, were nothing short of dismal, showing manufacturing contracting across most of the region, highlighting the economic toll that virus-containing measures are having. The main concern remains that the massive global stimulus measures simply won't be fully effective while many economies remain in a state of lockdown of as-yet unknown duration. While USD-JPY held near net unchanged levels around the 107.50 mark, the likes of AUD-JPY and other commodity-currency yen crosses posted losses of around 1%, while EUR-JPY lost around 0.5%. We continue to anticipate USD-JPY trading at sub-100.00 levels.

      [GBP, USD]
      The pound has come back under pressure against the dollar, euro and yen, while rising versus the underperforming commodity currencies. Cable dipped to a low at 1.2330, but has so far remained above the five-day low seen yesterday at 1.2255. Yesterday's low extended the correction from the 18-day high that was seen last Friday at 1.2486 (which was the culmination of a 9%-plus rebound from the 35-year low that was seen on March 20th at 1.1409). The pound continues to registers as an underperformer on the year-to-date, down by about 7% versus the dollar, and by 5% and 8% down against the euro and yen, respectively. We expect the UK currency will remain vulnerable so long as global markets remain apt to risk aversion, or at least unable to sustain rebounds, which might prove to be the case while there remains uncertainty about the duration major economies will remain in a state of lockdown. The UK's dependency on foreign investment to fund its current account deficit is the Achilles' heel of the pound that is exposed during persisting eras of acute risk aversion in global markets. Brexit also remains a blot on the pound's landscape with Boris Johnson's government aiming to take the UK out of its special transition membership of the EU's customs union and single market at the end of the year, which would put a large part of UK trade on less favourable WTO terms. We think Johnson will ultimately, however, opt for an extension in the transition period.

      [USD, CHF]
      EUR-CHF has continued to gravitate around the 1.0600 level, holding above the five-year low that was seen on March 9th at 1.0505. Assuming the coronavirus crisis persists, as looks highly likely, this should maintain Swiss franc's safe haven premium, which at the least should limit upside scope of EUR-CHF. The U.S. in January added Switzerland to its list of currency manipulators. The move seems a bit rich given the franc is a demonstrably chronically-overvalued currency in purchasing parity terms (as illustrated by the Economist's Big Mac index), though the Trump administration argues that Switzerland needs a more expansive fiscal policy.

      [USD, CAD]
      The Canadian dollar has remained under pressure with oil prices sinking back toward major-trend lows as crude storage facilities burst at the seems from excessive supplies. USD-CAD has gained up nearly 1% in making a 1.4185 high, though the pair so far has remained below yesterday's peak at 1.4350. Crude prices are down by over 65% year-to-date. This level of price decline in Canada's principal export, while it sustains, marks a significant deterioration in the Canadian economy's terms of trade. Given the glut of crude flooding the market, and given that demand will remain weak for a historically protracted amount of time, we anticipate that the Canadian dollar will remain apt to underperformance. USD-CAD revisiting its recent 17-year high at 1.4669 seems likely before long.

      XE Currency Blog

      Topics7018 Posts7063
      By XE Market Analysis March 31, 2020 2:42 pm
        XE Market Analysis's picture
        XE Market Analysis Posts: 4942
        XE Market Analysis: Asia - Mar 31, 2020

        The Dollar index headed lower in N.Y. on Tuesday, touching 98.99, down from opening highs of 99.93. Month and quarter end related USD selling was reported through the morning session. Incoming data saw better than expected Chicago PMI and consumer confidence prints, though markets continue to look past the data in an environment of rapidly expanding pandemic. Wall Street dipped lower on profit taking, while Treasury yields moved lower. EUR-USD ranged between 1.0927 and 1.1027, settling near its highs, while USD-JPY fell from over 108.70 to lows under 107.50. USD-CAD dropped from near 1.4350 to 1.4070, while Cable advanced from near 1.2350 to 1.2473 highs.

        [EUR, USD]
        EUR-USD printed four-session lows of 1.0927 into the open, later rallying to 1.1027 into the London close on short covering backed interest. Dollar demand has eased dramatically this week, following the Fed's bottomless stimulus package, though until the pandemic peaks, we expect EUR-USD to trade on a softer footing. The pairing has stayed below its 200-day moving average since Monday, currently at 1.1080, which remains a good resistance level.

        [USD, JPY]
        USD-JPY headed to intra day lows of 107.56, after opening over 108.70. Today marks Japan's fiscal year end, which will likely keep the JPY in chop mode, as rebalancing and repatriation Yen flows are set to continue. The latest USD-JPY downdraft comes into the London close, where sellers have taken control. The start of April can be expected to see USD-JPY return to its negatively correlated relationship to risk taking levels, while Japanese investor redeployment of capital, should initially provide some USD-JPY support.

        [GBP, USD]
        Cable opened the N.Y. session near 1.2350, later making its way to 1.2473 highs into the London close. The pound continues to registers as an underperformer on the year-to-date, down by over 7% versus the dollar. We expect the UK currency will remain vulnerable so long as global markets remain apt to risk aversion, or at least unable to sustain rebounds, which might prove to be the case while there remains uncertainty about the duration major economies will remain in a state of lockdown.

        [USD, CHF]
        EUR-CHF traded on either side of the 1.0600 mark in N.Y. on Tuesday, after hitting one-week lows of 1.0552 on Monday. Safe haven demand for the CHF will likely continue on and off amid heightening concerns about the global economic disruptions being caused by efforts to contain the coronavirus.

        [USD, CAD]
        USD-CAD peaked at 1.4349, levels last seen last Wednesday, and up from Monday's close near 1.4170. The pairing later pulled back under 1.4100 in very choppy trade. Canada's Western Canadian Select grade of crude oil currently trades with a $4 handle, prompting production shut-ins. The cost of shipping Canadian oil to refiners now exceeds the price of the oil, according to Bloomberg. The prospects for a quick rebound in oil prices remain bleak, given the COVID-19 backdrop and ramped up Saudi production. As a result, despite today's quarter-end round of CAD repatriation, USD-CAD should remain under pressure going forward.

        XE Currency Blog

        Topics7018 Posts7063
        By XE Market Analysis March 31, 2020 7:12 am
          XE Market Analysis's picture
          XE Market Analysis Posts: 4942
          XE Market Analysis: North America - Mar 31, 2020

          The dollar has traded firmer for a second day, rebounding from recent underperformance, which had been a reflection of the Fed's aggressive actions to satiate demand for dollars. More broadly, global markets have settled in what are comparatively narrowly ranges by recent standards. The commodity currencies have traded softer, suggesting there is little buy-in to a sustained improvement in global market sentiment, despite gains in stock markets. AUD-USD punched out a four-day low at 0.6079, extending the correction from Friday's two-week high at 0.6202. The latter high was the culmination of a rally from the 17-year low that was seen on March 19th at 0.5507. USD-CAD, meanwhile, reached a six-day high, at 1.4246, despite a 5%-plus rebound in oil prices, which remain down by 65% year-to-date. The narrow trade-weighted USD index (DXY) lifted by 0.5% in making a four-day high at 99.73, extending the rebound from Friday's low at 98.29, but remaining comfortably below the 38-month high seen on March 23rd at 102.98. EUR-USD concurrently ebbed below Monday's low in reaching a low at 1.0948, and Cable printed a four-day low at 1.2256. USD-JPY posted a four-day high at 108.72. There was a batch of data out of the Asia-Pacific region today. China's official PMI surveys for March showed an eye-popping rise to 52.0 in the headline manufacturing reading, and a rise to 52.3 in the services PMI headline, indicating both sectors are back in expansion, though there is widespread incredulity about the accuracy of the data. This said, VW reported that is has resumed production in 22 of its 24 plants in China, reaffirming the picture of resuming work in the country. Japan retail sales and production data beat forecasts, but were accompanied by official warnings that the data ahead will better reflect the impact of the virus-containment measures. South Korea industrial output, meanwhile, hit at nine-year low, Australian consumer confidence dove to a record low, and New Zealand business confidence tipped to -63.5 in the latest ANZ survey from -19.4 in the month prior, with indications pointing to an even worse figure next month. Regarding the coronavirus, there are tentative signs that the lockdown is working. The UK, for instance, reported that growth in hospital admittances is no longer accelerating. However, the global death rate is still rising exponentially, and probably won't hit peak for some weeks.

          [EUR, USD]
          EUR-USD posted a decline of 0.7% in making a four-day low a 1.0967. The pair has continued to be mostly driven by broader directional dynamics of the dollar, with the narrow trade-weighted USD index (DXY) lifting for a second day, by 0.5% in making a four-day high at 99.68, extending the rebound from Friday's low at 98.29. The dollar still remains comfortably below the 38-month high seen on March 23rd at 102.98, which was set before the Fed stepped in with aggressive actions to satiate the crisis-induced demand for dollars. The recent pronounced narrowing in the dollar's yield advantage over the Eurozone, driven by the Fed's aggressive monetary policies, looks to have based out for now. The U.S. 10-year T-note versus Bund yield differential troughed last Wednesday at 110.5 bp, since tracking back above 115.0 bp, with EUR-USD concurrently coming off the boil. Bigger picture, what the relative political and economic impact that virus-containing measures will have in Europe and the U.S. are unclear, though the issue of the viability of the euro and the EU itself is once again being held in doubt by euroskeptics. The Eurozone countries so-far hardest hit by the virus in Europe -- Italy, Span and France -- have the least fiscal room for manoeuvre. On balance, we still remain bearish of EUR-USD.

          [USD, JPY]
          USD-JPY posted a four-day high at 108.72, buoyed by a generally firmer dollar, while yen crosses have traded mixed on what is month- and quarter-end, and the end of Japan's fiscal year. There were a batch of data out of the Asia-Pacific region today. China's official PMI surveys for March showed an eye-popping rise to 52.0 in the headline manufacturing reading, and a rise to 52.3 in the services PMI headline, indicating both sectors are back in expansion, though there is widespread incredulity about the accuracy of the data. This said, VW reported that is has resumed production in 22 of its 24 plants in China, reaffirming the picture of resuming work in the country. Japan retail sales and production data beat forecasts, but were accompanied by official warnings that the data ahead will better reflect the impact of the virus-containment measures. South Korea industrial output, meanwhile, hit at nine-year low, Australian consumer confidence dove to a record low, and New Zealand business confidence tipped to -63.5 in the latest ANZ survey from -19.4 in the month prior, with indications pointing to an even worse figure next month. Regarding the coronavirus, there are tentative signs that the lockdown is working. The UK, for instance, reported that growth in hospital admittances is no longer accelerating. However, the global death rate is still rising exponentially, and probably won't hit peak for some weeks. Italy's government said it may extend its lockdown until May 4, too. Few are now expecting a V-shaped economic recovery out of this, such as was seen following the SARS epidemic in Asia in 2003. The only question is how wide the "U" with be in a U-shaped recovery.

          [GBP, USD]
          The pound was showing of nearly 1% at its lows against the dollar, and also posted losses against the euro and yen, and most other currencies. Cable hit a four-day low at 1.2255, extending the correction from the 18-day high that was seen last Friday at 1.2486 (which was the culmination of a 9%-plus rebound from the 35-year low that was seen on March 20th at 1.1409). The pair subsequently recouped to the lower 1.2300s. The pound continues to registers as an underperformer on the year-to-date, down by about 7% versus the dollar, and by 6% and 7% down against the euro and yen, respectively. We expect the UK currency will remain vulnerable so long as global markets remain apt to risk aversion, or at least unable to sustain rebounds, which might prove to be the case while there remains uncertainty about the duration major economies will remain in a state of lockdown. The UK's dependency on foreign investment to fund its current account deficit is the Achilles' heel of the pound that is exposed during persisting eras of acute risk aversion in global markets. Brexit also remains a blot on the pound's landscape with Boris Johnson's government aiming to take the UK out of its special transition membership of the EU's customs union and single market at the end of the year, which would put a large part of UK trade on less favourable WTO terms. We think Johnson will ultimately, however, opt for an extension in the transition period.

          [USD, CHF]
          EUR-CHF has continued to gravitate around the 1.0600 level, holding above the five-year low that was seen on March 9th at 1.0505. Assuming the coronavirus crisis persists, as looks highly likely, this should maintain Swiss franc's safe haven premium, which at the least should limit upside scope of EUR-CHF. The U.S. in January added Switzerland to its list of currency manipulators. The move seems a bit rich given the franc is a demonstrably chronically-overvalued currency in purchasing parity terms (as illustrated by the Economist's Big Mac index), though the Trump administration argues that Switzerland needs a more expansive fiscal policy.

          [USD, CAD]
          USD-CAD reached a six-day high, at 1.4208, despite a 5%-plus rebound in oil prices, which are still down by 65% year-to-date. This level of price decline in Canada's principal export, while it sustains, marks a significant deterioration in the Canadian economy's terms of trade. Given the glut of crude flooding the market and storage facilities, and given that demand will remain weak for a historically protracted amount of time, we anticipate that the Canadian dollar will remain apt to underperformance. We see USD-CAD revisiting its recent 17-year high at 1.4669 before long.

          XE Currency Blog

          Topics7018 Posts7063
          By XE Market Analysis March 31, 2020 4:12 am
            XE Market Analysis's picture
            XE Market Analysis Posts: 4942
            XE Market Analysis: Europe - Mar 31, 2020

            The dollar has traded firmer for a second day, rebounding from recent underperformance, which was a reflection of the Fed's aggressive actions to satiate demand for dollars. More broadly, global markets have settled in what are comparatively narrowly ranges by recent standards. The pound is showing a near 1% decline against the dollar, and is down against the euro and yen, and most other currencies. The commodity currencies have traded softer, suggesting there is little buy-in to a sustained improvement in global market sentiment. The narrow trade-weighted USD index (DXY) lifted by about 0.4% in making a four-day high at 99.54, extending the rebound from Friday's low at 98.29, but remaining comfortably below the 38-month high seen on March 23rd at 102.98. EUR-USD concurrently ebbed below Monday's low in reaching a low at 1.0991, and Cable printed a four-day low at 1.2256. USD-JPY posted a four-day high at 108.71. USD-CAD, meanwhile, reached a six-day high, at 1.4208, despite a 5%-plus rebound in oil prices, which are still down by 65% year-to-date. There were a batch of data out of the Asia-Pacific region today. China's official PMI surveys for March showed an eye-popping rise to 52.0 in the headline manufacturing reading, and a rise to 52.3 in the services PMI headline, indicating both sectors are back in expansion, though there is widespread incredulity about the accuracy of the data. This said, VW reported that is has resumed production in 22 of its 24 plants in China, reaffirming the picture of resuming work in the country. Japan retail sales and production data beat forecasts, but were accompanied by official warnings that the data ahead will better reflect the impact of the virus-containment measures. South Korea industrial output, meanwhile, hit at nine-year low, Australian consumer confidence dove to a record low, and New Zealand business confidence tipped to -63.5 in the latest ANZ survey from -19.4 in the month prior, with indications pointing to an even worse figure next month. Regarding the coronavirus, there are tentative signs that the lockdown is working. The UK, for instance, reported that growth in hospital admittances is no longer accelerating. However, the global death rate is still rising exponentially, and probably won't hit peak for some weeks. Italy's government said it may extend its lockdown until May 4, too.

            [EUR, USD]
            EUR-USD ebbed below Monday's low in reaching a low at 1.0991. The pair has continued to be mostly driven by broader directional dynamics of the dollar, with the narrow trade-weighted USD index (DXY) lifting for a second day, by about 0.4% in making a four-day high at 99.54, extending the rebound from Friday's low at 98.29. The dollar remains comfortably below the 38-month high seen on March 23rd at 102.98, which was set before the Fed stepped in with aggressive actions to satiate the crisis-induced demand for dollars. The recent pronounced narrowing in the dollar's yield advantage over the Eurozone, driven by the Fed's aggressive monetary policies, looks to have based out for now. The U.S. 10-year T-note versus Bund yield differential troughed last Wednesday at 110.5 bp, since tracking back above 115.0 bp, with EUR-USD concurrently coming off the boil. Bigger picture, what the relative political and economic impact that virus-containing measures will have in Europe and the U.S. are unclear, though the issue of the viability of the euro and the EU itself is once again being held in doubt by euroskeptics. The Eurozone countries so-far hardest hit by the virus in Europe -- Italy, Span and France -- have the least fiscal room for manoeuvre. On balance, we still remain bearish of EUR-USD.

            [USD, JPY]
            USD-JPY posted a four-day high at 108.71, buoyed by a generally firmer dollar, while yen crosses have traded mixed on what is month- and quarter-end, and the end of Japan's fiscal year. There were a batch of data out of the Asia-Pacific region today. China's official PMI surveys for March showed an eye-popping rise to 52.0 in the headline manufacturing reading, and a rise to 52.3 in the services PMI headline, indicating both sectors are back in expansion, though there is widespread incredulity about the accuracy of the data. This said, VW reported that is has resumed production in 22 of its 24 plants in China, reaffirming the picture of resuming work in the country. Japan retail sales and production data beat forecasts, but were accompanied by official warnings that the data ahead will better reflect the impact of the virus-containment measures. South Korea industrial output, meanwhile, hit at nine-year low, Australian consumer confidence dove to a record low, and New Zealand business confidence tipped to -63.5 in the latest ANZ survey from -19.4 in the month prior, with indications pointing to an even worse figure next month. Regarding the coronavirus, there are tentative signs that the lockdown is working. The UK, for instance, reported that growth in hospital admittances is no longer accelerating. However, the global death rate is still rising exponentially, and probably won't hit peak for some weeks. Italy's government said it may extend its lockdown until May 4, too. Few are now expecting a V-shaped economic recovery out of this, such as was seen following the SARS epidemic in Asia in 2003. The only question is how wide the "U" with be in a U-shaped recovery.

            [GBP, USD]
            The pound is showing a near 1% decline against the dollar, and is down against the euro and yen, and most other currencies. Cable posted a four-day low at 1.2256, extending the correction from the 18-day high that was seen last Friday at 1.2486 (which was the culmination of a 9%-plus rebound from the 35-year low that was seen on March 20th at 1.1409). The pound continues to registers as an underperformer on the year-to-date, down by over 7% versus the dollar, and by 6% and 7% down against the euro and yen, respectively. We expect the UK currency will remain vulnerable so long as global markets remain apt to risk aversion, or at least unable to sustain rebounds, which might prove to be the case while there remains uncertainty about the duration major economies will remain in a state of lockdown. Brexit also remains a blot on the pound's landscape with Boris Johnson's government aiming to take the UK out of its special transition membership of the EU's customs union and single market at the end of the year, which would put a large part of UK trade on less favourable WTO terms. We think Johnson will ultimately, however, opt for an extension in the transition period.

            [USD, CHF]
            EUR-CHF has continued to gravitate around the 1.0600 level, holding above the five-year low that was seen on March 9th at 1.0505. Assuming the coronavirus crisis persists, as looks highly likely, this should maintain Swiss franc's safe haven premium, which at the least should limit upside scope of EUR-CHF. The U.S. in January added Switzerland to its list of currency manipulators. The move seems a bit rich given the franc is a demonstrably chronically-overvalued currency in purchasing parity terms (as illustrated by the Economist's Big Mac index), though the Trump administration argues that Switzerland needs a more expansive fiscal policy.

            [USD, CAD]
            USD-CAD reached a six-day high, at 1.4208, despite a 5%-plus rebound in oil prices, which are still down by 65% year-to-date. This level of price decline in Canada's principal export, while it sustains, marks a significant deterioration in the Canadian economy's terms of trade. Given the glut of crude flooding the market and storage facilities, and given that demand will remain weak for a historically protracted amount of time, we anticipate that the Canadian dollar will remain apt to underperformance. We see USD-CAD revisiting its recent 17-year high at 1.4669 before long.

            XE Currency Blog

            Topics7018 Posts7063
            By XE Market Analysis March 30, 2020 3:11 pm
              XE Market Analysis's picture
              XE Market Analysis Posts: 4942
              XE Market Analysis: Asia - Mar 30, 2020

              The Dollar index bounced modestly in N.Y. on Monday, after getting hammered lower last week. The DXY rallied from opening lows of 98.92 to 99.31 highs. The USD touched its worst levels of the day following the Dallas Fed index, which plunged to -70.0 from 1.2, on the back of coronavirus and cratering oil prices. WTI crude traded under $19.40/bbl, the lowest in 18 years. Wall Street bounced however, on the back of extended virus containment plans, and on recently passed U.S. economic stimulus efforts. EUR-USD ranged between 1.1062 at the open to 1.1010 lows. USD-JPY moved between 108.28 and 107.65, while USD-CAD topped at 1.4184, up from 1.4124. GBP-USD peaked at 1.2441, later falling to 1.2355.

              [EUR, USD]
              EUR-USD fell from opening highs over 1.1060, later bottoming at 1.1010. After narrowing sharply following Fed rate cuts and stimulus, interest rates spreads between the U.S. and Europe have steadied above lows seen last week, which has benefited the Greenback today, and marks the first down-day for the pairing since March 20. For the remainder of the week, the USD may run into headwinds, as the incoming data are likely to paint a fairly ugly picture. Manufacturing ISM, ADP jobs, and BLS jobs reports are all expected to fall sharply. Next EUR-USD resistance comes at the 200-day moving average, currently at 1.1082.

              [USD, JPY]
              USD-JPY has recovered from the near two-week low of 107.13 seen in Asian trade overnight, peaking at 108.30 early in the U.S. session. The paring dipped to N.Y. session lows pf 1-7/65 after the horrific Dallas Fed print, since recovering as Wall Street rallies sharply. Japan's fiscal year end comes on Tuesday, and will likely keep the JPY in chop mode, as rebalancing flows are set to continue. The start of April can be expected to see USD-JPY return to its negatively correlated relationship to risk taking levels.

              [GBP, USD]
              Cable gains seen last week stalled on Monday, with the pairing remaining below the two-week high of 1.2485 seen Friday, and ranging between 1.2441 and 1.2355 in N.Y. About two thirds of the rebound from the major-trend low reflected a broader turn lower the dollar last week. We expect the UK currency to remain vulnerable so long as global markets remain apt to risk aversion, or at least unable to sustain rebounds, which might prove to be the case while there remains uncertainty about the duration major economies will remain in a state of lockdown. Brexit also remains a blot on the pound's landscape with Boris Johnson's government aiming to take the UK out of its special transition membership of the EU's customs union and single market at the end of the year, which would put a large part of UK trade on less favourable WTO terms.

              [USD, CHF]
              EUR-CHF eased back to 1.0564, after recovering to over three-week highs of 1.0654 on Thursday, as risk-off conditions returned following three-straight days of equity rallied. Safe haven demand for the CHF will likely continue on and off amid heightening concerns about the global economic disruptions being caused by efforts to contain the coronavirus.

              [USD, CAD]
              USD-CAD rallied from early Asian lows of 1.3988, topping at 1.4184 in early North American trade. WTI crude's slide to 18-year lows of $19.86 has been a driver of the pairing's advance, though Canadian heavy crude prices have collapsed to under $5/bbl over the past few sessions, prompting production shut-ins. The cost of shipping Canadian oil to refiners now exceeds the price of the oil, according to Bloomberg. The prospects for a quick rebound in oil prices remain bleak, given the COVID-19 backdrop, and as a result, the CAD should remain under pressure.

              XE Currency Blog

              Topics7018 Posts7063
              By XE Market Analysis March 30, 2020 4:40 am
                XE Market Analysis's picture
                XE Market Analysis Posts: 4942
                XE Market Analysis: North America - Mar 30, 2020

                The dollar has traded steady-to-firmer against the other main currencies so far today. Influenced by a 0.5% decline in EUR-USD, the narrow trade-weighted USD index (DXY) lifted to a 98.98 high, over 60 pips up on Friday's closing level and setting the index up for its first daily gain since last Monday. The yen has also traded firmer versus most currencies, especially the European units, which have underperformed moderately. The dollar bloc currencies are modestly lower amid a backdrop of sputtering global stock markets. USD-JPY edged out a 12-day low at 107.14 before recouping to the upper 107.0s. AUD-USD, like other pairings, has held a relatively narrow range by recent standards, of 0.6113 - 0.6184, holding below Friday's two-week high at 0.6202. USD-CAD lifted above Friday's high in making peak at 1.4097. This comes with oil prices once gain taking a tumble. Front-month WTI prices hit a low at $19.92, which is the lowest level since the two-decade low seen on March 20th. The euro, sterling and Swiss franc have underperformed so far today posting declines of around 0.5%-0.6% against the dollar. EUR-USD posted a low at 1.1056 after closing on Friday at 1.1148-50. A close today below the latter levels would mark the first down day the pairing has seen since March 19th. Overall, currency pairings have remained within recent ranges, and global markets have traded relatively calmly so far today. The major concern remains that the massive global stimulus efforts announced to-date simply won't be able to offset the full consequences of economies being in a frozen state of lockdown, a situation that looks likely to endure for several months. JP Morgan is currently forecasting world GDP to contract by 10.5% in the first half of the year alone. Most expect a strong recovery "on the side" of the crisis.

                [EUR, USD]
                EUR-USD has posted a low at 1.1056 after closing on Friday at 1.1148-50. A close today below the latter levels would mark the first down day the pairing has seen since March 19th, over which time the euro rallied from a 35-month low at 1.0637. The narrow trade-weighted USD index (DXY) concomitantly lifted to a 98.98 high, over 60 pips up on Friday's closing level and setting the index up for its first daily gain since last Monday. The recent pronounced narrowing in the dollar's yield advantage over the Eurozone, driven by the Fed's aggressive monetary policies, looks to have based out for now. The U.S. 10-year T-note versus Bund yield differential based last Wednesday at 110.5 bp, and has since steadied, tracking back above 115.0 bp, with EUR-USD concurrently coming off. Bigger picture, what the relative political and economic impact that virus-containing measures will have in Europe and the U.S. are unclear. The issue of the viability of the euro and the EU itself is once again being held in doubt by euroskeptics, while the countries so-far hardest hit by the virus in Europe -- Italy, Span and France -- have the least fiscal room for manoeuvre. On balance, we still remain bearish of EUR-USD.

                [USD, JPY]
                The yen has traded firmer versus most currencies, especially the European units, which have underperformed moderately so far today. USD-JPY edged out a 12-day low at 107.14 before recouping to the upper 107.0s. Risk appetite has neither been here nor there, though a negative sentiment looks to be building. Asian stock markets sputtered, while S&P 500 futures have traded both in the negative and in the positive, while most European indices pared intraday losses. Currency flows into tomorrow's month- and quarter-end, along with Japanese fiscal year ending, may generate some choppy near-term price action in the yen. Bigger picture, we expect the Japanese currency to remain a safe haven. The major concern remains that the massive global stimulus efforts announced to date simply won't be able to offset economies in a frozen state of lockdown, a situation that looks likely to endure for several months. JP Morgan is currently forecasting world GDP to contract by 10.5% in the first half of the year alone. The exponential rate of new coronavirus cases globally has continued. Cases in the U.S. have surged, and it might be several weeks before the benefits of the global lockdown are seen. Few are now expecting a V-shaped economic recovery out of this, such as was seen following the SARS epidemic in Asia in 2003. The only question is how wide the "U" with be in a U-shaped recovery. We continue to anticipate USD-JPY trading at sub-100.00 levels.

                [GBP, USD]
                Cable is softer today after rallying last week. The pair posted a 17-day high at 1.2486 on Friday, which was the culmination of a rebound from the 35-year low that was seen on March 20th at 1.1409. The pairing has settled in the upper 1.2300s, near 1.2400. About two thirds of the rebound from the major-trend low reflected a broader turn lower the dollar, at the influence of the Fed's policies, while the broad stabilization in global markets last week gave the pound a chance to rebound, having underperformed markedly during the recent acute periods of risk aversion. Despite the impressive rebound, the pound still remains, at levels prevailing, down by about 7% versus the dollar on the year-to-date, and by 6% and 7.5% down against the euro and yen, respectively, over the same period. We expect the UK currency to remain vulnerable over the coming months. The coronavirus crisis is far from over, and we expect global markets to remain apt to risk aversion, despite massive global stimulus efforts, or at least unable to sustain rebounds, so long as major economies remain in a state of lockdown. This is a negative backdrop for sterling, given the tendency for there to be a shortfall in foreign investment during troubled times to finance the UK's current account deficit. Brexit also remains a blot on the pound's landscape with Boris Johnson's government aiming to take the UK out of its special transition membership of the EU's customs union and single market at the end of the year, which would put a large part of UK trade on less favourable WTO terms. We think Johnson will ultimately, however, opt for an extension in the transition period.

                [USD, CHF]
                EUR-CHF has flapped back under the 1.0600 level as risk aversion picks up again in global markets. A revisit of the five-year low that was seen on March 9th at 1.0505 looks more likely than not, assuming the coronavirus persists, as looks highly likely, which should maintain the Swiss franc's safe haven premium. The U.S. in January added Switzerland to its list of currency manipulators. The move seems a bit rich given the franc is a demonstrably chronically-overvalued currency in purchasing parity terms (as illustrated by the Economist's Big Mac index), though the Trump administration argues that Switzerland needs a more expansive fiscal policy.

                [USD, CAD]
                USD-CAD lifted above Friday's high in making peak at 1.4124. This comes with oil prices once gain taking a tumble. Front-month WTI prices hit a low at $19.92, which is the lowest level since March 20th, when crude prices hit a their lowest since 1999 (in nominal terms). Oil prices are down by a massive 67% on the year-to-date, and losses are sustaining, marking a significant deterioration in the Canadian economy's terms of trade. Given the glut of crude flooding the market and storage facilities, and given that demand will remain weak for a historically protracted amount of time, we anticipate a resumption in Canadian dollar weakening, with USD-CAD seen revisiting its recent 17-year high at 1.4669 before long.

                XE Currency Blog

                Topics7018 Posts7063
                By XE Market Analysis March 30, 2020 4:09 am
                  XE Market Analysis's picture
                  XE Market Analysis Posts: 4942
                  XE Market Analysis: Europe - Mar 30, 2020

                  The dollar has traded steady-to-firmer against the other main currencies so far today. Influenced by a 0.5% decline in EUR-USD, the narrow trade-weighted USD index (DXY) lifted to a 98.92 high, over 50 pips up on Friday's closing level and setting the index up for its first daily gain since last Monday. The yen has also traded firmer versus most currencies, especially the European units, which have underperformed moderately. The dollar bloc currencies are modestly lower, despite a backdrop of sputtering stock markets in Asia, which was offset by a 0.7% gain in S&P 500 futures, rebounding after the cash version of the index closed with a 3.4% loss on Friday. USD-JPY edged out a 12-day low at 107.14 before recouping to the upper 107.0s. AUD-USD, like other pairings, has held a relatively narrow range by recent standards, of 0.6113 - 0.6184, holding below Friday's two-week high at 0.6202. USD-CAD made time just above 1.4000 and Friday's two-week low at 1.3920. Oil prices tumbled again. Front-month WTI prices hit a low at $19.92, which is the lowest level since March 20th, when crude prices hit a their lowest since 1999 (in nominal terms). The euro, sterling and Swiss franc have underperformed so far today posting declines of around 0.5% against the dollar. EUR-USD posted a low at 1.1069 after closing on Friday at 1.1148-50. A close today below the latter levels would mark the first down day the pairing has seen since March 19th. Overall, currency pairings have remained within recent ranges, and global markets have traded relatively calmly so far today. The major concern remains that the massive global stimulus efforts announced to-date simply won't be able to offset the full consequences of economies being in a frozen state of lockdown, a situation that looks likely to endure for several months. JP Morgan is currently forecasting world GDP to contract by 10.5% in the first half of the year alone.

                  [EUR, USD]
                  EUR-USD posted a low at 1.1069 after closing on Friday at 1.1148-50. A close today below the latter levels would mark the first down day the pairing has seen since March 19th. The narrow trade-weighted USD index (DXY) concomitantly lifted to a 98.92 high, over 50 pips up on Friday's closing level and setting the index up for its first daily gain since last Monday. The recent pronounced narrowing in the dollar's yield advantage over the Eurozone, driven by the Fed's aggressive monetary policies, looks to have based out for now. The U.S. 10-year T-note versus Bund yield differential based last Wednesday at 110.5 bp, and has since lifted back towards 120.0 bp. This has helped EUR-USD come off the boil. Bigger picture, the relative political and economic impact of virus-containing measures being taken looks to be greater in Europe than the U.S. The countries hardest hit by the virus in Europe -- Italy, Span and France -- have the least fiscal room for manoeuvre, and the issue of the viability of the euro and EU is once again being held in doubt by Euroskeptics. Fundamentally, we remain bearish of EUR-USD.

                  [USD, JPY]
                  The yen has traded firmer versus most currencies, especially the European units, which have underperformed moderately. USD-JPY edged out a 12-day low at 107.14 before recouping to the upper 107.0s. Risk appetite has neither been here nor there, though a negative sentiment looks to be building. Asian stock markets sputtered, while S&P 500 futures turned negative after trading in the black earlier. This should lift safe haven premiums in global markets, and so keep the yen generally bid, though flows into tomorrow's month- and quarter-end, along with Japanese fiscal year ending, may generate some choppy price action. The major concern remains that the massive global stimulus efforts announced to date simply won't be able to offset economies in a frozen state of lockdown, a situation that looks likely to endure for several months. JP Morgan is currently forecasting world GDP to contract by 10.5% in the first half of the year alone. The exponential rate of new coronavirus cases globally has continued. Cases in the U.S. have surged, and it might be several weeks before the benefits of the global lockdown are seen. Few are now expecting a V-shaped economic recovery out of this, such as was seen following the SARS epidemic in Asia in 2003. The only question is how wide the "U" with be in a U-shaped recovery. We continue to anticipate USD-JPY trading at sub-100.00 levels.

                  [GBP, USD]
                  Cable is softer today after rallying last week. The pair posted a 17-day high at 1.2486 on Friday, which was the culmination of a rebound from the 35-year low that was seen on March 20th at 1.1409. About two thirds of the rebound reflected the broader turn lower the dollar, at the influence of the Fed's policies, while the broad stabilization in global markets last week gave the pound a chance to rebound, having underperformed markedly during the recent acute periods of risk aversion. Despite the impressive rebound, the pound still remained, at levels prevailing in the early London session today, down 7% versus the dollar on the year-to-date, and by 6% and 7.5% down against the euro and yen, respectively, over the same period. We expect the pound to remain vulnerable. The coronavirus crisis is far from over, and we expect global markets to remain apt to risk aversion, despite the massive global stimulus efforts, while major economies remain in a state of lockdown. This is a negative backdrop for sterling, given the shortfall in foreign investment in troubled times to finance the UK's current account deficit. Brexit also remains a blot on the pound's landscape with Boris Johnson's government aiming to take the UK out of its special transition membership of the EU's customs union and single market at the end of the year, which would put a large part of UK trade on less favourable WTO terms. We think Johnson will ultimately, however, opt for an extension in the transition period.

                  [USD, CHF]
                  EUR-CHF has flapped back under the 1.0600 level as risk aversion picks up again in global markets. A revisit of the five-year low that was seen on March 9th at 1.0505 looks more likely than not, assuming the coronavirus persists, as looks highly likely, which should maintain the Swiss franc's safe haven premium. The U.S. in January added Switzerland to its list of currency manipulators. The move seems a bit rich given the franc is a demonstrably chronically-overvalued currency in purchasing parity terms (as illustrated by the Economist's Big Mac index), though the Trump administration argues that Switzerland needs a more expansive fiscal policy.

                  [USD, CAD]
                  USD-CAD lifted above Friday's high in making peak at 1.4097. This comes with oil prices once gain taking a tumble. Front-month WTI prices hit a low at $19.92, which is the lowest level since March 20th, when crude prices hit a their lowest since 1999 (in nominal terms). Oil prices are down by a massive 67% on the year-to-date, and losses are sustaining, marking a significant deterioration in the Canadian economy's terms of trade. Given the glut of crude flooding the market and storage facilities, and given that demand will remain weak for a historically protracted amount of time, we anticipate a resumption in Canadian dollar weakening, with USD-CAD seen revisiting its recent 17-year high at 1.4669 before long.

                  XE Currency Blog

                  Topics7018 Posts7063
                  By XE Market Analysis March 27, 2020 3:07 pm
                    XE Market Analysis's picture
                    XE Market Analysis Posts: 4942
                    XE Market Analysis: Asia - Mar 27, 2020

                    The Dollar index fell to near two-week lows in N.Y. on Friday, sliding from 99.80 to 98.51. The USD lost ground to all major currencies, as unwinding of safe-haven Dollar flows continued to reverse the gains seen in thew prior two-weeks. It was risk-off through the session, as COVID-19 cases in the U.S. surpassed China. After rising for three-sessions, Wall Street and Treasury yields pulled back. On the U.S. data front, personal income was better than expected, though the University of Michigan consumer sentiment index fell to levels last seen in October of 2016. The latter did prompt some Dollar selling. EUR-USD ramped up from 1.0953 to 1.11110 highs. USD-JPY hit lows of 107.85, after hitting early highs of 108.90. USD-CAD fell to near 1.3980 despite a surprise BoC rate cut and sharply lower oil prices, while Cable topped 1.2440, up from 1.2180 into the open.

                    [EUR, USD]
                    EUR-USD rallied to near two-week highs of 1.1091, up from early lows of 109.53. Continued unwinding of safe-haven Dollar flows has lifted the pairing from lows under 1.0640 seen Monday, following the Fed's unlimited supply of dollars through FX swap lines with other G7 central banks. Given the Fed's commitment, we look for further EUR-USD gains in the coming sessions.

                    [USD, JPY]
                    USD-JPY traded to eight-session lows of 107.85 in N.Y. on Friday, falling from early highs of 108.90. The pairing fell below both its 50- and 200-day moving averages, which stand at 109.95 and 108.31, respectively. There were reports of heavy Yen repatriation related buying ahead of Japan's fiscal year-end next Tuesday, which exacerbated the USD-JPY move lower. There has been some pressure on the pairing since the open, as risk-off conditions resurfaced.

                    [GBP, USD]
                    Cable rallied to two-week highs of 1.2442 in thin N.Y. afternoon trade on Friday, up from 1.2180 lows into the open. Cable was up by 10 big figures from the 35-year low that was seen last week at 1.1409. About two thirds of this rebound from major-trend lows reflected the broader turn lower the dollar, at the influence of the Fed's policies, while the broad stabilization in global markets in recent days gave the pound a chance to rebound, having underperformed markedly during the recent acute periods of risk aversion.

                    [USD, CHF]
                    EUR-CHF eased back to 1.0564, after recovering to over three-week highs of 1.0654 on Thursday, as risk-off conditions returned following three-straight days of equity rallied. Safe haven demand for the CHF will likely continue on and off amid heightening concerns about the global economic disruptions being caused by efforts to contain the coronavirus.

                    [USD, CAD]
                    USD-CAD rallied to 1.4155, after trading near 1.4070 following the unscheduled BoC 50 basis point rate cut. The bank's statement said "This unscheduled rate decision brings the policy rate to its effective lower bound and is intended to provide support to the Canadian financial system and the economy during the COVID-19 pandemic." The BoC said in its statement it would begin buying commercial paper and government of Canada bonds. Later, USD-CAD fell to near two-week lows of 1.3984. The unscheduled rate cut, along with another steep oil selloff and risk-off conditions did not keep the CAD down, largely as the USD remained broadly under pressure. The DXY moved to near two-week lows, and has printed lower daily highs for five-straight sessions.

                    XE Currency Blog

                    Topics7018 Posts7063
                    By XE Market Analysis March 27, 2020 7:37 am
                      XE Market Analysis's picture
                      XE Market Analysis Posts: 4942
                      XE Market Analysis: North America - Mar 27, 2020

                      The dollar declined and then recovered some of its losses, which saw the narrow trade-weighted USD index (DXY) print a nine-day low at 99.15 before recouping levels back above 99.50 . At the lows, the index was showing a correction of 3.2% from the 38-month high that was seen last week, which can be credited to the Fed's ultra aggressive dollar printing activity. There has also been a side theme of pronounced losses in USD-JPY and yen crosses, with demand for yen during the Tokyo session reportedly driven by repatriation of Japanese investment funds, according to several market reports and narratives (Japan's financial year-end is nigh). USD-JPY, aided by broad dollar weakness, dropped by about 1% in printing a one-week low at 108.25 before finding a footing. EUR-JPY, AUD-JPY and most other yen crosses declined, too. Elsewhere, EUR-USD edged out a 10-day high at 1.1087, before ebbing back under 1.1050. Cable printed an eleven-day high, at 1.2306. As for the coronavirus, the exponential rate of new cases has continued. Cases in the U.S. have surged, and it might be several weeks before the benefits of the global lockdown are seen. Few are now expecting a V-shaped economic recovery out of this, such as was seen following the SARS epidemic in Asia in 2003. The only question is how wide the "U" with be in a U-shaped recovery.

                      [EUR, USD]
                      EUR-USD has ebbed back from a 10-day high that was printed at 1.1087 during the Asian session. The high extended the rebound from the 35-month low that was seen last week at 1.0637, and was the product of dollar weakness, which concurrently saw the narrow trade-weighted USD index (DXY) peg a nine-day low at 99.15. At the lows, the index was showing a correction of 3.2% from the 38-month high that was seen last week, which can be credited to the Fed's ultra aggressive dollar printing activity. Given the Fed's level of commitment, we expect EUR-USD to remain biased to the upside for now.

                      [USD, JPY]
                      USD-JPY and yen crosses traded lower, which had looked out of sync with the usual correlative pattern in light of a backdrop of mostly-higher stock and commodity markets in Asia today, though risk appetite subsequently turned to the negative, with European and U.S. index futures coming under pressure as the three-day rebound faltered. The demand for yen during the Tokyo session was driven by repatriation of Japanese investment funds, according to several market reports and narratives, even though the timing, just a few days before Japan's financial year end, seems a little strange. USD-JPY, aided by broad dollar weakness, dropped by about 1% in printing a one-week low at 108.25. EUR-JPY, AUD-JPY and most other yen crosses declined, too, correcting after their recent spurt higher. Subsequently, the yen gave back up to half of its gains as the European interbank market picked up the reins. As for the coronavirus, the exponential rate of new cases has continued. Cases in the U.S. have surged, and it might be several weeks before the fruits of the global lockdown is seen. Few are now expecting a V-shaped economic recovery out of this, such as was seen following the SARS epidemic in Asia in 2003. The only question is how wide the "U" with be in a U-shaped recovery. We continue to anticipate much more risk-wary trading ahead, and see USD-JPY at sub-100.00 levels.

                      [GBP, USD]
                      Cable printed an 11-day high at 1.2306 amid a broad bout of dollar weakness, before correcting back under 1.2200. At the high today, the pound had racked up a 8 big figure gain from the 35-year low that was seen last week at 1.1409. About two thirds of this rebound from major-trend lows reflected the broader turn lower the dollar, at the influence of the Fed's policies, while the broad stabilization in global markets in recent days gave the pound a chance to rebound, having underperformed markedly during the recent acute periods of risk aversion. The BoE's March Monetary Committee Meeting, which concluded yesterday, was something of a non-event for markets, with policy settings left unchanged, although it provided an opportunity for it to justify its recent emergency moves to cut the repo rate from 0.75% to 0.10% while expanding its purchase program. The central bank stressed that it could further expand QE, if necessary. There was an emergency liquidity operation of GBP 11.13 bln ($13 bln) via the Contingent Term Repo Facility, which was activated this week to cover the huge demand for cash. Another operation will be held on April 2. The BoE, unsurprisingly, expects a very sharp reduction in economic activity and risk of longer term damage to the economy as a consequence of the coronavirus. Despite the rebound over the last several sessions, the pound at prevailing levels still remains over 8% down on the dollar on the year-to-date, and by between 7% and 8% down versus the euro and yen. We are not anticipating a full recovery given the shortfall in foreign investment in the prevailing trouble times to finance the UK's current account deficit. We expect the government will before long extend the Brexit transition period, which keeps the UK in the EU's customs union and single market, beyond the end of the year.

                      [USD, CHF]
                      EUR-CHF has nudged above 1.0600 as a level of risk appetite returns to global markets, which has seen the price premiums of safe havens such as the Swiss franc fall back. The gains put a little extra distance in from the five-year low that was seen on March 9th at 1.0505. The U.S. in January added Switzerland to its list of currency manipulators. The move seems a bit rich given the franc is a demonstrably chronically-overvalued currency in purchasing parity terms (as illustrated by the Economist's Big Mac index), though the Trump administration argues that Switzerland needs a more expansive fiscal policy.

                      [USD, CAD]
                      USD-CAD ebbed to a 10-day low at 1.3987. The Canadian dollar, like other commodity currencies, has been trading firmer amid the rebound in equity markets this week. Oil prices have been choppy, though have stabilized above the major-trend lows that were seen last week. At the same time, the Fed's aggressive actions has been keeping the U.S. dollar on a back foot. The Canadian dollar has been been faring less well versus currencies other than the U.S. buck, for the most part. Oil prices are down by over 62% on the year-to-date, and remain near levels last seen in 2002 (in both nominal and inflation-adjusted prices), which, if sustained, would mark a significant deterioration in the Canadian economy's terms of trade.

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