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By XE Market Analysis April 18, 2018 3:04 pm
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    XE Market Analysis: Asia - Apr 18, 2018

    The dollar dipped in early trade, taking the DXY to 89.45 lows, from a pre-open high of 89.77. A modest USD short covering rally set in ahead of the London close, which lifted the index back to 89.63. There was no data to drive the market, and FX trade overall was subdues. EUR-USD ranged between 1.2397 and 1.2371, as USD-JPY bottomed at 107.10 before topping at 107.31. USD-CAD shot higher on a "cautious" BoC policy statement, after leaving rates unchanged, as expected. Cable settled in the low 1.42s following its London slide on soft U.K. CPI.

    [EUR, USD]
    EUR-USD ran out of upside momentum below 1.2400, short of Tuesday's three-week peak of 1.2413. The failure to make new highs prompted a round of position squaring into the London close, with the pairing subsequently bottoming at 1.2371. Ahead of the open, Eurozone March HICP data was revised down to 1.3% y/y from 1.4% y/y, which followed yesterday's sub-forecast German ZEW survey, putting a lid on euro buying as the report further developed an economic-slowing theme in the Eurozone.

    [USD, JPY]
    USD-JPY has posted session highs of 107.31, up from 107.10 lows. The risk-on backdrop, and faded geopolitical concerns seen this week have supported the pairing, though upside continues to be a struggle in light of Japan political scandals, and uncertainty over PM Abe's future. Market speculation has been should Abe resign, Japan's current ultra-easy policy may be in for some changes.

    [GBP, USD]
    Cable settled above its post-data lows, lodged in the lower 1.4200s after printing a four-day low at 1.4171. The pound was whacked after UK March CPI unexpectedly dipped to a one-year low rate of 2.5% y/y, from 2.7% y/y. Cable has been trending higher for a year, and presently looks to be in the early phase of a corrective wave, with trend supports having been breached and momentum indicators turning lower.

    [USD, CHF]
    EUR-CHF hit a new 39-month highs of 1.1992 on Wednesday. A background support for the cross is the widespread expectation for the SNB to remain strongly committed to negative interest rates until after the ECB starts tightening. The central bank's chairman, Jordan, said in an interview over the weekend with La Liberte newspaper that "it is not yet time to change monetary policy," adding that "we do not want to provoke an appreciation of the Swiss franc." Jordan said that the economic situation has improved over the last year, but low inflation (at 0.8% y/y in March) remained, a problem.

    [USD, CAD]
    USD-CAD spiked up to 1.2635 highs from 1.2550 following the BoC announcement, where rates were left unchanged at 1.25%, as widely expected. The statement indicated that the Bank would maintain its cautious stance on future policy changes, and remains data dependent. USD-CAD short covering was the driver of the post-BoC rally, partly reversing sharp losses from over 1.2800 last week. Later, despite WTI crude trading over $68/bbl, USD-CAD maintained altitude, posting a seven-session high of 1.2659.

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