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By XE Market Analysis August 12, 2019 2:51 pm
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    XE Market Analysis: Asia - Aug 12, 2019

    The Dollar faded lower through the N.Y. session, though ranged remained narrow. The DXY opened at highs of 97.55, later making its way to 97.33 lows. There was no data to drive the market on Monday, though the trade war, Hong Kong protests, Italian government crisis, Brexit, etc, saw Treasury yields and Wall Street slide. EUR-USD opened at the lows of 1.1186, later peaking at 1.1230. USD-JPY meanwhile, hit new seven-month lows of 105.05 as risk-off conditions dominated. USD-CAD maintained a narrow trading band, rallying to 1.3244 from lows of 1.3213 early on. Cable steadied just under 1.2100 through the day, after touch new trend lows of 1.2015 seen in London. Tuesday will bring U.S. July CPI, which could shake up the USD, and Fed rate cut expectations.

    [EUR, USD]
    EUR-USD was again range bound through the N.Y. session, bottoming at 1.1189 early, later bouncing to 1.1230 into the London close. The pairing continues to struggle for traction over the 1.12 mark, largely remaining inside of the 20-day moving average at 1.1173, and its 50-day moving average at 1.1238 for the past week. Escalation of the U.S./China trade war has kept the Dollar from breaking higher, as Fed rate cut threats remain in place. On the other hand, Italy's political crisis, and Brexit, along with Europe's fading growth outlook will limit the Euro's rise, especially given the ECB is set to ease policy in September as well. For now, it appears range trade may remain in fashion.

    [USD, JPY]
    USD-JPY traded to fresh seven month lows into the N.Y. open, bottoming at 105.05. Another risk-off session, led by myriad factors including trade war angst, unrest in Hong Kong, political issues in Italy, and Brexit, have all combined to support the risk-sensitive Yen. Lower Treasury yields along with another Wall Street sell-off should keep USD-JPY upside contained for now. The next support levels come at 105.00, then the January 3 "flash crash" low of 104.65.

    [GBP, USD]
    The Pound firmed up in N.Y. trade, after printing new lows during the Asia-session. Cable rallied to around the 1.2100 mark, up from the 31-month low seen at 1.2015. The fresh lows were seen in a thin inter bank market today in the absence of Japan and Singapore, which were out for public holidays and came despite the speculative market running an acute net short exposure to the pound (CFTC positioning data showed the biggest net short position the futures market since 2017 in the latest reporting week). Regarding Brexit, there are intense debates and of backroom machinations at play, but little in the way of substantial developments. This will change when the UK parliament returns from its summer recess on September 2.

    [USD, CHF]
    EUR-CHF headed back toward trend lows in N.Y. on Monday, bottoming at 1.0871. Risk-off conditions once again supported the safe-haven 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 peaked at 1.3250 into the North American open, later falling to 1.3213 lows as oil prices rallied to session highs. The pairing has since headed back over 1.3240, as WTI crude retreated lower, and as risk-off conditions in general prevail. There is no domestic data due this week to drive the pairing, so it will continue to be a combination of U.S. data (CPI on Tuesday, retail sales on Thursday)), oil prices, and risk taking levels that will drive USD-CAD direction. The 50-day moving average at 1.3188 provides support, with resistance at Friday's top of 1.3274.

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