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By XE Market Analysis August 9, 2019 3:16 pm
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    XE Market Analysis: Asia - Aug 09, 2019

    The Dollar edged lower through the morning session in N.Y. on Friday, weighed down some by a cooler core U.S. PPI print. The DXY fell to 97.36 from early highs of 97.61, before recovering over 97.50 into the close on pre-weekend short covering. Wall Street was lower on ongoing trade concerns, while Treasury yields remained under pressure. EUR-USD was rangebound between 1.1184 and 1.1223, closing about mid-range. USD-JPY fell to new seven-month lows of 105.29, coming from 105.85 at the open, later settling at 105.60. USD-CAD rallied to 1.3273 on the back of a weak Canada jobs report, though retreated to near 1.3200 as oil prices headed higher. Cable meanwhile, printed a 30 month low of 1.2059 following negative U.K. GDP data.

    [EUR, USD]
    EUR-USD was again range bound through the N.Y. session. bottoming at 1.1189 early, later bouncing to 1.1223 after the London close. The pairing has printed three straight sessions of lower daily highs, as it continues to struggle for traction over the 1.12 mark. Escalation of the U.S./China trade war this week has kept the Dollar from breaking higher however, as Fed rate cut threats remain in place. On the other hand, Europe's growth outlook continues to deteriorate, as the U.S. economy hums along at a decent pace. This will limit the Euro's rise, especially given the ECB is set to ease policy in September as well. For now then, range trade may remain in vogue.

    [USD, JPY]
    USD-JPY printed fresh seven-month lows of 105.29, down from near 105.85 at the N.Y. open. Losses have been slow and steady, starting with the cooler core U.S. PPI outcome, then continuing its downward path following Trump comments regarding trade talks with China. Trump indicated trade talks may or may not happen in September, and also said the U.S. would be cutting ties and would not deal with Huawei. This leaves the threat of the additional 10% tariffs on September 1 looking increasingly likely. The risk-sensitive Yen appears to have room to move higher still, ans the trade war continues to escalate. The next support levels come at 105.00, then the January 3 "flash crash" low of 104.65.

    [GBP, USD]
    Sterling took a hit on the unexpected UK GDP contraction, which put Cable at a 30-month low of 1.2059. The -0.2% preliminary Q2 GDP figure, which disappointed the median forecast for a flat reading, was accompanied by underwhelming production data, which contributed to the decline in overall growth. Given the risk for a no-deal Brexit scenario and backdrop of slowing European and global economies, it doesn't look likely that the UK economy will be able to shake out of its recessionary course. This should keep the Pound under pressure going forward.

    [USD, CHF]
    EUR-CHF steadied on either side of 1.09 in N.Y. on Friday. The mover earlier in the week was China's yuan devaluation and ramped up trade tensions, resulting in safe-haven flows into the CHF. The ECB's course to additional monetary stimulus in September, and risk aversion in global markets following Trump's escalation in his trade way with China last week, along with today's developments, have been weighing on the cross. The risk of a disorderly no-deal Brexit on October 31 is also in the mix, which is a bearish factor for the cross.

    [USD, CAD]
    USD-CAD spiked up to 1.3274 from near 1.3210 after the weaker Canada employment report, though remained well under the seven-week high of 1.3345 seen on Wednesday, which came as oil prices collapsed by 5%. WTI crude has recovered to near $55.00 through the session, which resulted in USD-CAD retracing to session lows of 1.3206.

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