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By XE Market Analysis April 16, 2018 4:02 pm
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    XE Market Analysis: Asia - Apr 16, 2018

    FX trade was relatively quiet in N.Y. on Monday, though the dollar overall was a bit softer, seeing the DXY bottom at 89.39 from opening highs of 89.61. INcoming data was mixed, with retail sales a touch better than consensus, and the Empite State index missing the mark. EUR-USD ranged between 1.2359 and 1.2395, while USD-JPY bottomed at 107.03. USD-CAD fell from 1.2610 highs to 1.2569, while cable came within a hair of post-brexit highs, topping at 1.4337.

    [EUR, USD]
    EUR-USD maintained a very familiar trading range through the session, bottoming at 1.2359 into the early U.S. data, then bouncing to 1.2395 highsm before settling near 1.2375. The pairing has been inside a 1.2200-1.2500 band since the beginning of March, and more of the same can be expected for the time being.

    [USD, JPY]
    USD-JPY bottomed at 107.03 after opening near 107.40. The yen has added to recent strength on the back of protests against Japan PM Abe this weekend, where 50,000 reportedly marched outside of parliament. A government land scandal has seen Abe's popularity ratings plummet of late, with some now calling for his resignation. Such an event would put into question the future of Abenomics, which has seen the economy in super-stimulus mode over the years, and has resulted in a greatly weakened yen.

    [GBP, USD]
    Cable came within a few points of a post-Brexit vote high, printing 1.4337. The post-Brexit peak is at 1.4345, which was set on January 24. The pair tracked EUR-USD amid a clear weakening in the dollar. This is now the fifth out of the last six weeks Cable has posted higher highs. A big week for UK data releases looms, with labour data up tomorrow, inflation figures on Wednesday, and retail sales on Thursday. The UK's upper house will also be debating the Brexit bill on Wednesday. Many market participants will be looking to the data to cement expectations for the BoE to make a second-in-the-cycle repo rate hike in May.

    [USD, CHF]
    EUR-CHF has broken sharply higher last week, extending to a fresh 39-month high at 1.1890 on Thursday. The SNB is widely expected to remain strongly committed to negative interest rates until after the ECB starts tightening. SNB board member Maechler, for instance, recently bemoaned a still "highly valued" currency and argued that premature tightening in monetary policy would be counterproductive. EUR-CHF has rallied nearly 11% from mid last year. We have a long standing target for the cross to return to the 1.2000 level, which was the SNB's cap that was abandoned back in January 2015.

    [USD, CAD]
    USD-CAD dipped to intra day lows of 1.2568 in North American trade, with selling coming in concert with WTI crude's early bounce. NAFTA negotiations remain uncertain, though upbeat reports over the weekend that the U.S. is working on a compromise solution on autos, the biggest sticking point of the ongoing talks, may be benefiting the CAD this morning. The market will look ahead to the BoC policy meeting on Wednesday, where we look for no changes.

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