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By XE Market Analysis December 5, 2018 1:18 pm
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    XE Market Analysis: Asia - Dec 05, 2018

    U.S. equity futures traded Wednesday and managed a modest rebound after Tuesday's drop. This may provide some boost when Wall Street reopens Thursday. Treasury markets were closed as well. The Dollar index was a bit firmer, but FX trade was very thin

    [EUR, USD]
    EUR-USD fell to 1.1350 in early N.Y. trade, which was considerably thinned with both the bond and stock markets closed. The pairing later made its way to 1.1358 after the London close. While U.S. yields have been falling, which undermines one plank of Dollar support, yields have also been on the ebb in the Eurozone. Thursday's U.S. calendar is heavy, and may give the FX market fresh directional pull.

    [USD, JPY]
    USD-JPY remained supported through the day, likely helped by official comment from China. “The economic and trade teams will actively push forward with negotiations, in accordance with a clear timetable and route map, within 90 days,” said a China official. U.S. equities were closed today along with the Treasury market, though futures earlier indicated Tuesday's market meltdown may have abated, which should keep a floor under USD-JPY.

    [GBP, USD]
    Cable rallied to 1.2798 highs into the N.Y. open, after slipping following post-PMI data selling. The pound later drifted under 1.2710 in listless N.Y. trade. UK political developments have seen Sterling's discount unwind some, inoculating the currency from what would have otherwise been a strong selling cue. The risks of a no-deal Brexit crash-out scenario are being priced out after a parliamentary vote on a motion that would change the process in the event that the Prime Minister May's deal is voted down, which could potentially see Parliament take control of the Brexit process from cabinet ministers.

    [USD, CHF]
    EUR-CHF steadied over 1.1300 in N.Y. on Wednesday.Trade was very light given the partial U.S. holiday.

    [USD, CAD]
    USD-CAD spiked up to five-plus month highs of 1.3379 from 1.3290 following the BoC announcement and statement, which noted a "materially weaker" than expected energy sector, and signs that trade conflicts are weighing more heavily on global demand. The Bank continues to see the need for higher rates, though will remain highly focused on incoming data, trade, and the oil market. As a result, the CAD may remain on the defensive for the foreseeable future. Next USD-CAD resistance comes at the June 27 high of 1.3387. Later, the pairing advanced further, topping at 1.3399, levels last seen in early June of 2017. The market may set its sights next on the psych 1.3500 level.

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