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By XE Market Analysis April 9, 2019 3:35 pm
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    XE Market Analysis: Asia - Apr 09, 2019

    The Dollar index fell to near two-week lows of 96.86 early in the N.Y. session on Tuesday, later recovering some ground, taking the DXY to 97.04 highs. Fresh trade fears, following Trump threats to tariff European goods brought safe-haven Dollar buying to bear, lifting the unit from its lows. EUR-USD topped over 1.1280, later falling under 1.1265. USD-JPY bottomed at 110.98 on a weak Wall Street, though managed a recovery to 111.15 into the London close. USD-CAD topped near 1.3330 as oil prices moved off their best levels, while Cable faded to 1.3030 on ongoing Brexit concerns.

    [EUR, USD]
    EUR-USD ran out of rally room above 1.1280 (20-day moving average), topping at 1.12884 early in the session before heading back under 1.1265. Position squaring ahead of Wednesday's ECB policy meeting has likely been behind the modest Euro pullback today, which can be expected to continue overnight tonight. The ECB turned full-bore dovish at the last meeting, and more of the same can be expected this time around, which won't do the Euro any favors.

    [USD, JPY]
    USD-JPY printed seven-session lows of 110.98, coming from 111.38 into the N.Y. open. General Dollar weakness, along with lower Treasury yields and modest risk-off conditions have weighed on the pairing this morning, though buying interest returned under the psych 111.00 mark, and the 20-day moving average, which stands at 111.05. Fresh trade concerns have supported the Yen as well, with the U.S. now threatening tariffs on Europe, while a trade deal with China is still not a certainty. The April 1 low of 110.80 is the next support level

    [GBP, USD]
    Cable eased in N.Y. trade, bottoming at 1.3030 from opening highs over 1.3080. We're still waiting for substantive Brexit developments. UK government ministers are meeting with Labour counterparts amid ongoing efforts to find a cross-party compromise on Brexit. The potential compromise is one that would take the form of May's Withdrawal Agreement plus a guarantee the UK would remain in the EU's customs union in the future, which would both satisfy Labour demands while obviating the need for an Irish backstop. If the talks were to succeed, then the UK would be set to leave on May 22, ahead of European Parliament elections on May 23. If the talks fail, May has committed to putting in a series of Brexit options to Parliament, though clearly a further delay in Brexit will be needed for this. If these options in turn fail to produce a consensus, then a referendum or general election may be the only viable ways forward.

    [USD, CHF]
    EUR-CHF rallied to a two-week high at 1.1279, extending the rebound from the eight-month low seen in late March at 1.1162. The rotation high has reflected broader Euro gains, which have bee aided by some above-forecast economic data out of the Eurozone, and increased odds for the UK to be heading to a "soft" version of Brexit. SNB member Maechler said this week that while the Swiss economy remains dynamic and the global economy should remain solid, inflation pressures remain very weak and the environment is fragile, which continues to warrant expansionary monetary policy.

    [USD, CAD]
    USD-CAD rallied over 1.3325 from near three-week lows of 1.3284. The modest move higher came as WTI crude gives back the $64 handle, trading to $63.94 lows. In addition, buyers stepped in under the 50-day moving average at 1.3289. Bigger picture, aside from trend highs in oil prices, the CAD has been benefiting from a generally weaker USD, with the DXY posting near two-week lows this morning.

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