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By XE Market Analysis December 17, 2018 2:34 pm
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    XE Market Analysis: Asia - Dec 17, 2018

    The Dollar headed lower overnight, taking the DXY 97.06 lows from overnight highs of 97.46, and from 18-month highs of 97.71 seen on Friday. Incoming U.S. data included a sharp drop in the Empire State index, and a softer NAHB housing index, which put some downward pressure on the Greenback. Wall Street imploded again, leaving yields lower. EUR-USD stuck to a narrow range, topping at 1.1358, while USD-JPY posted one-week lows of 112.71 as risk-off conditions prevailed. USD-CAD traded over 1.34 as oil prices dropped, while Cable was stuck on either side of 1.2600.

    [EUR, USD]
    EUR-USD was fairly steady through the session, ranging between 1.1330 and 1.1358 since the open. The pairing has traded in a relatively narrow band for nearly a month now, though given signs of a slowdown in Europe, along with political and social issues in Italy and France, combined with a likely Fed rate hike on Wednesday, the Euro should remain in sell-the-rally mode for now.

    [USD, JPY]
    USD-JPY has traded to one-week lows of 112.71, down from near 113.30 ahead of the weaker Empire State index outcome. Wall Street continued to move lower, adding to sharp recent losses, which has weighed on the risk-sensitive USD-JPY. Next support comes at 112.25.

    [GBP, USD]
    Sterling has found a footing after declining for three consecutive weeks on Brexit-related angst, which left a 20-month low versus the dollar last week at 1.2476. Cable settled to a narrow range near 1.2600. UK Prime Minister is continuing to plug away in her diplomatic effort to sweeten the Brexit deal, but it's "crystal clear" -- in the words of European Commission President Juncker on Friday -- that there won't be any renegotiation by the EU, other than a clarification of the deal on offer. This suggest that the Withdrawal Agreement from the EU is headed for eventual failure in the UK Parliament.

    [USD, CHF]
    EUR-CHF continues to hold under the 1.1300 mark after the SNB confirmed its policy setting which relies on the combination of negative interest rates and the threat of ad hoc FX intervention to keep the "highly valued" franc under control and "fragile" currency markets. Ongoing Brexit uncertainty and other political risks in Europe and on the global stage as well as protectionist tendencies will likely keep the SNB in wait and see mode for a long time to come.

    [USD, CAD]
    USD-CAD topped at 1.3410, coming from overnight lows of 1.3373. Another oil price sell-off supported, while general risk-off conditions continued to weigh on the Loonie. Unless WTI make a clear reversal higher, a buy the dip strategy for USD-CAD remains in place.

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