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By XE Market Analysis April 20, 2018 2:06 pm
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    XE Market Analysis: Asia - Apr 20, 2018

    The DXY posted two-week highs in N.Y. on Friday, taking its cue from firmer Treasury yields. EUR-USD fell to 1.2250 lows, down more than 100 points from overnight highs. USD-JPY topped at 107.86, a two-month top. USD-CAD printed two-week highs of 1.2749 following cooler Canada CPI and retail sales. Cable remained under pressure following BoE's Carney comments on Thursday, where he walked back the prospects for a May rate hike. Sterling bottomed at 1.4007.

    [EUR, USD]
    EUR-USD printed two-week lows of 1.2250, down from overnight highs of 1.2353. Pre-weekend London short covering has seen the pairing since bounce to 1.2300 highs. The euro had been capped over the 1.2400 level through the week, and remains in sell the rally mode. European economic activity has sputtered some of late, raising the potential for an easier ECB for longer, a definite euro-negative.

    [USD, JPY]
    USD-JPY topped at 107.86, a two-month high. Softer Japan CPI data weighed on the yen overnight, with follow-through gains seen in N.Y. morning trade. Since then, the pairing has stumbled to lows of 107.51 on the back of a soured risk backdrop.

    [GBP, USD]
    Cable posted its fourth consecutive down day, printing fresh two-week lows under 1.4007, extending the correction from the 21-month high that was seen on Tuesday at 1.4376. BoE Governor Carney on Thursday walkws back prospects for a May rate hike. He said that while there will be "a few interest rate rises over the next few years," he didn't want "to get too focused on timing." Cable has been trending higher for a year, and is now in the throws of a corrective wave, with trend supports having been breached and momentum indicators turning lower.

    [USD, CHF]
    EUR-CHF pulled back from the key 1.2000 level on Friday, profit taking set in following the first time the cross has traded above the SNB's former trading floor (or franc cap), which it abandoned in January 2015 in the face of broad and unstoppable euro depreciation caused by ECB monetary stimulus. This is the fourth consecutive week, and the sixth out of the last eight weeks EUR-CHF has rallied, and the cross is now over 12.5% higher from the levels of mid last year. USD-CHF has concurrently ascended into three-month high terrain. The franc has been driven lower by the -0.75% Swiss deposit rate along with 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 with the La Liberte newspaper this week that "it is not yet time to change monetary policy," adding that "we do not want to provoke an appreciation of the Swiss franc."

    [USD, CAD]
    USD-CAD soared to two-week highs of 1.2749 highs from 1.2645 following the cooler inflation and softer retail sales data. Trump's verbal intervention in the oil market earlier didn't help the CAD either, as he earlier tweeted "Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!". That saw WTI prices slide $1/bbl to $67.58 lows.

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