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By XE Market Analysis August 31, 2018 2:52 pm
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    XE Market Analysis: Asia - Aug 31, 2018

    The Dollar rallied broadly in N.Y. on Friday, after it became clear that the U.S. and Canada would not be making a trade deal. Safe-haven flows buoyed the Greenback. The DXY rallied to near highs of the week, peaking at 95.22. EUR-USD fell to one week low of 1.1585, as USD-JPY rallied to 111.10, despite the risk-off backdrop. USD-CAD moved over 1.3080 from 1.3020 on trade troubles, while cable fell back under 1.3000 to 1.2946 lows.

    [EUR, USD]
    EUR-USD has traded to lows of the week, bottoming at 1.1585, and down from 1.1656 highs seen early in the session. Broad safe-haven dollar buying appeared to pick up following confirmation that the U.S./Canada trade deal would not be coming today. Next real Euro support comes at the 20-day moving average at 1.1538.

    [USD, JPY]
    USD-JPY hit seven-session lows of 110.69 in London morning trade, reacting to the risk-off market conditions seen since Trump threatened to withdraw the U.S. from the WTO, and on reports he is leaning toward additional tariffs on $200 bln of China goods. The pairing has since steadied, though has not mounted a test of the 111.00 level since falling under it. The August 23 low of 110.52 is the next downside target.

    [GBP, USD]
    Cable tipped below 1.3000, breaking what had been a day long close orbit of that level, pulled lower by the gravity of general Dollar appreciation. The low was 1.2946. On the week, the Pound is showing an average gain of over 0.7% versus the G3 currencies, which is the legacy of sharp gains that were seen on Wednesday after the EU's chief negotiator Barnier said the EU is ready to give the UK an unprecedented deal for a country with non-member status.

    [USD, CHF]
    EUR-CHF has been declining concomitantly with falls in the Turkish Lira, along with a slew of the emerging market currencies. Pressure on the Lira in particular, given the exposure of Europe to Turkey, has managed to rekindle the long-dormant role of the Swiss Franc as a safe haven currency. EUR-CHF has fallen to a two-week low at 1.1290, returning toward the 13-month low seen on August-15 at 1.1243. SNB Vice Chairman Zurbruegg said recently that the central bank's ultra-accommodative monetary policy (negative interest rates coupled with tactical forex interventions) was justified.

    [USD, CAD]
    USD-CAD has traded to four-session highs of 1.3047, as the Globe & Mail reports Canadian officials not seeing a trade deal done today. CNBC reported some agreement could be done over the next few weeks. A sticking point appears to be the NAFTA Chapter 19 clause, which was designed to arbitrate trade disputes. The U.S. wants the measure scrapped, while Canada is adamant on keeping it in place. Canada's dairy industry protection has been a matter of disagreement as well. Later, the pairing rallied to session highs of 1.3088 after Canada's foreign affairs minister Freeland said there would be no trade deal today, saying Canada wants a "good deal, not just any deal". There were reports that a leaked "off the record" Trump interview was behind the lack of agreement, as the president allegedly said that the possible deal with Canada would be “totally on our terms.”

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