Pro-cyclical currencies rise in Asia

Pro-cyclical currencies, Asian currencies climb

Rebounding commodity prices and vaccine optimism have lifted pro-cyclical and Asian currencies this morning. The dollar index rose 0.83% to 90.83 on Friday, but a quiet day on the majors has seen it edge lower to 90.80 in Asia.

Far more activity is being seen on the Australian and New Zealand dollars today, which endured a torrid session on Friday and registered sharp losses. The Australian dollar has risen 0.60% to 0.7750, and the New Zealand dollar is ignoring the Auckland lockdown, increasing 0.58% to 0.7274 this morning. Both have fallen over 3.0% in the previous sessions, so it would be far too soon to say their downward corrections are over in a week packed with event risk. Key support for AUD/USD is 0.7700, and for NZD/USD, it is 0.7200. Failure signals more losses ahead.

The Canadian dollar remains in trouble as well, with USD/CAD at 1.2705 this morning, a stone’s throw away from its resistance line at 1.2725, which extends back to its March 2020 highs. A rise through 1.2725 targets more USD/CAD gains to its 100-day moving average (DMA) at 1.2885 initially.

USD/JPY’s choppy one-month rally is back on track today, with the pair rising 0.35% to 106.55 on Friday. Although unchanged today, USD/JPY should now target 108.00 in the coming days. GBP/USD has fallen back into its multi-month channel and could retreat as far as 1.3750 this week ahead of the UK budget. EUR/USD fell to 1.2075 on Friday, and its critical pivot-point remains 1.2000, with a failure opening more profound losses.

In Asia, the PBOC set the USD/CNY fix slightly higher at 6.4754, but Asian currencies have rallied across the board on vaccine recovery hopes. The yuan, baht, Singapore dollar and Philippines peso are all around 0.20% higher today, ignoring weaker PMI data released earlier. As long as USD/CNY remains confined in a 6.4000/6.5000 range, regional Asian currencies are likely to continue weathering the storms seen elsewhere.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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