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By XE Market Analysis December 16, 2019 3:06 pm
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    XE Market Analysis: Asia - Dec 16, 2019

    The Dollar firmed up some in N.Y. trade on Monday, taking the DXY from 96.94 lows to a 97.11 peak. Holiday mode appears to be upon us, as narrow trading ranges were generally the rule. Decent incoming PMIs and housing builder index helped USD sentiment. Wall Street posted new record highs, while Treasury yields heading up as well. EUR-USD eased from 1.1158 highs, later bottoming at 1.1135, as USD-JPY opened near 109.40, making its way to 109.68 ahead of the London close. USD-CAD steadied over 1.3150, up from 1.3113 lows. Cable meanwhile, eased to 1.3321 from 1.3380 at the open.

    [EUR, USD]
    EUR-USD was range bound in N.Y., treading water between 1.1158 and 1.1135 through the morning session. Overnight, the pairing rose from 1.1122 lows to 1.1148 into the U.S. open. Friday's four-month top at 1.1201, which came late last week on the U.K. election outcome, will remain the next upside target, though the 200-day moving average at 1.1154 may cap the EUR for now. Holiday mode is setting in quickly, and traders may not push the level too hard. Generally though, with progress made on trade and Brexit, the Dollar may have seen its best levels for a while to come.

    [USD, JPY]
    USD-JPY is up some from opening lows in Asia, trading from 109.25 to 109.50 highs during the London morning session. Risk-on was supportive of the pairing, though with the holiday season ramping up, and year-end approaching, we expect price action and volatility to stay reined in. With a phase one trade deal apparently in place now, and the Brexit picture clearing following the Conservative Party election rout in the U.K., risk taking levels are likely to remain elevated into the start of 2020. As a result, USD-JPY downside should be contained for the time being. The pairing later topped at 109.68.

    [GBP, USD]
    The Pound settled lower after rallying strongly on news of the UK election result late last week. Cable edged down through the N.Y. session, touching 1.3321, off from 1.3380 at the open, and 1.3422 overnight. The broad trade-weighted measure of sterling has rallied by nearly 11% from the historic lows of August, though remains down by 6-7% from levels prevailing ahead of the vote to leave the EU in June 2016. We don't anticipate this discount being fully unwound over the months ahead.

    [USD, CHF]
    EUR-CHF has settled lower after spiking on Friday to a six-week peak of 1.1033 on news of the strong election victory of the Conservative Party at the UK's election. This heralds the end of a protracted period of Brexit related uncertainty, which had been casting a pall over both the UK and European economies. The euro also posted gains against the dollar and yen, and most other currencies, with the main exception being the case against the pound.

    [USD, CAD]
    USD-CAD fell from overnight highs of 1.3157, slipping to better than one-month lows of 1.3113 in early North American trade. Risk-on conditions have weighed, though the pairing has been heavy since the dovish tilting FOMC last Wednesday. In addition, progress on the trade front, and WTI crude hovering near three-month highs since late last week, have been additional drivers of CAD strength. Support comes at the November low of 1.3109.

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