XE Market Analysis: Asia - Jun 25, 2020

The Dollar rallied into the N.Y open on Thursday, perking up as risk appetite fell through the European morning session. Wall Street was choppy, swapping gains for losses several times through the session. The moves came as investors battled between increasing virus outbreaks and hopes for economic recovery. Risk levels stabilized some later in the session, allowing the USD to fade lower. U.S. data was mostly positive, though jobless claims came in higher than expected. EUR-USD fell to lows of 1.1191 in early trade, later heading over 1.1230. USD-JPY rallied to 107.46 from London lows of 107.04, before slipping to 107.14. USD-CAD bottomed at 1.3621, later touching 1.3670. GBP-USD fell from 1.2457 to 1.2390, then steadying over 1.2400.

[EUR, USD]
EUR-USD fell through the London morning session, easing from 1.1250 highs to 1.1191 lows at the N.Y. open, A recovery in risk taking levels seen since then has resulted in a Euro bounce to 1.1231 highs. Given the Dollar's proclivity to rally in times of risk-off, we look for further safe-haven USD demand to keep pressure on EUR-USD. With the pandemic appearing to be worsening especially in the U.S., risk-off can be expected to dominate in the coming sessions.

[USD, JPY]
USD-JPY rallied to seven-session highs of 107.46 into the N.Y. open, up from London morning session lows of 107.04. The move higher came as U.S. equity futures hit the skids, though with Wall Street recovering early losses, USD-JPY has eased back to 107.14 lows. The Dollar has continued to react to risk taking levels, rallying on risk-off, and falling on risk-on conditions.

[GBP, USD]
Cable headed lower into the N.Y. open, driven by safe-haven Dollar flows. The pairing moved from 1.2457 highs ahead of the open, later bottoming at 1.2390, before inching up to 1.2420. We continue to expect the pound to remain apt to underperformance in the weeks ahead, assuming there won't either be a significant breakthrough in UK-EU trade talks, nor a walk back in the BoE's apparent tapering in QE.

[USD, CHF]
EUR-CHF remained under 1.0700 in N.Y. trade on Thursday, as risk taking levels steadied some. 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 printed a near two-week high of 1.3666 in London morning trade, with the combination of further oil price losses and general risk-off conditions supporting. WTI crude fell another 2-plus percent to $37.09, down from $41.63 highs seen on Tuesday. Fears of further pandemic damage has seen risk taking levels fall sharply over the past two session, which has weighed on the CAD as well.