XE Market Analysis: Asia - Jun 24, 2020

The Dollar rallied in N.Y. on Wednesday, taking the DXY to highs of 97.11 from overnight lows of 96.55. The USD headed higher largely on safe-haven flows, as the sharp rise in U.S. virus cases saw risk-taking levels evaporate, with fears rising that the tentative economic recovery could come undone if current cases continue to increase unabated. Wall Street was slammed lower, again, on economic fears. Also weighing on risk levels was the IMF's downgrade of U.S. growth in 2020. The fund dropped its estimate to a -4.9% rate of contraction for 2020 compared to the -3.0% pace seen in the April estimate. EUR-USD dropped from 1.1312 to 1.1255, while USD-JPY rallied to 106.99 from opening lows near 106.50. USD-CAD headed from 1.3551 lows to 1.3616 highs, as pandemic fears saw oil prices get routed. GBP-USD slide to 1.2416 lows from morning highs of 1.2510.

[EUR, USD]
EUR-USD opened near 1.1310, down from overnight highs of 1.1325. The pairing has since fallen to 1.1255 lows, as Dollar demand picked up on the back of the current risk-off environment. The Dollar likely was positively impacted by reports the USTR is considering new tariffs on EU goods, burnishing the USD's save-haven status. The next support level is at the 20-day moving average of 1.1248, followed by Tuesday's low of 1.1233.

[USD, JPY]
USD-JPY has headed to 106.85 highs in morning trade, up from near 106.55 at the open, and the overnight low of 106.42. Dollar safe-haven demand has picked up broadly as risk-off conditions prevail on Wednesday, driven by fresh pandemic worries, as cases spike up in multiple states, and globally. The pairing later peaked at 106.99 into the close. USD-JPY buy stops are noted over Tuesday's 107.23 high, a break of which will bring the 50-day moving average at 107.41 into focus.

[GBP, USD]
Sterling was under pressure from the London open, pressing lower against both the Dollar and Euro, among other currencies. Cable fell to 1.2416 lows, briefly dipping under its 50-day moving average at 1.2420 after earlier posting a six-day high at 1.2542. Dollar strength was the driver of the Cable selling, as sharp risk-off conditions prevailed, as rapidly rising virus cases in the U.S. and elsewhere, resulted in safe-haven USD buying.

[USD, CHF]
EUR-CHF fell to 1.0665 in N.Y. trade on Wednesday, as risk-off returned due to increasing virus threat. The cross had fallen back over the last week or so, though has continued to trade comfortably above the series of lows near 1.0500 that were seen from March through to mid May. Committed SNB intervention prevented the 1.0500 level from being breached over this period, when the consequences of the pandemic increasing bets about a possible breakup of the euro area, and even the EU. The SNB policy meeting was on Thursday, which stuck with negative rates for the foreseeable future and strengthened its commitment to intensify FX intervention if necessary to keep the CHF under control.

[USD, CAD]
USD-CAD rallied to 1.3616 in North America, up from overnight lows of 1.3525. The rally came in concert with general risk-off conditions, as pandemic concerns rise with fresh cases, and as WTI crude prices drop in excess of $4/bbl from Tuesday's three-month peak. The pairing headed back above its 20-day moving average, currently at 1.3550, which provides support, while Monday's 1.3631 highs is the next upside target.