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By XE Market Analysis December 19, 2019 2:10 pm
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    XE Market Analysis: Asia - Dec 19, 2019

    Another quiet pre-holiday FX session in N.Y. on Thursday, leaving major Dollar pairings range bound. Incoming U.S. data was on the soft side, leaving the Philly Fed index, jobless claims, and existing home sales missing consensus forecasts, though the FX market only lightly sold the Dollar off on the results. Wall Street turned a blind eye to the U.S. political backdrop and the data, rallying to fresh record highs, with Treasury yields edging higher as well. EUR-USD ranged between 1.1108 and 1.1131, as USD-JPY hit 109.18 lows from early highs near 109.50. USD-CAD idled between 1.3109 and 1.3138, while cable settled near two-plus week lows of 1.2991.Activity can be expected to keep winding down into year-end.

    [EUR, USD]
    EUR-USD was supported some by the mostly softer U.S. data seen today, though has managed a trading range of just 1.1131 to 1.1108 since the open. We look for more of the same into year-end, with the 1.1100 mark the likely fulcrum until the new-year. Steady growth in the U.S. along with a stabilizing picture in Europe, could see EUR-USD consolidation continue for a while.

    [USD, JPY]
    USD-JPY dipped to 109.34 lows from just over 109.50 following the weaker rounds of early U.S. data. Since then, Wall Street opened higher, providing a modicum of support to the pairing, though the soft housing data resulted in a session low of 109.18.. Year-end conditions continue to build, and follow through in either direction can be expected to remain limited.

    [GBP, USD]
    The Pound U-turned lower, more than giving up post-BoE announcement gains and racking up losses against the dollar, euro and yen. Cable printed a 15-day low at 1.2991, bringing the cumulative loss from last week's post-election peak to nearly 3.7%. While the BoE said that gradual and modest tightening in monetary policy may be needed over the forecast horizon, assuming global growth risks don't materialize and the Brexit process goes smoothly, the policymakers still highlighted that both global and Brexit risks remain on their radar screens. With regard to Brexit, prime minister Johnson's implied revival of the threat to leave the the EU without a deal, has obliged markets to factor back in a discount to the UK currency.

    [USD, CHF]
    EUR-CHF posted a new one-month low, at 1.0867, which is the culmination of quite a sharp drop from the seven-week peak of last Friday, at 1.1033. The high was seen on news of the strong election victory of the Conservative Party at the UK's election, though the euro, tracking sterling, came back under pressure after UK PM Johnson this week implied that the no-deal threat was still an option.

    [USD, CAD]
    USD-CAD has ranged between 1.3106 and 1.31 27 since the North American close, after hitting a seven week low of 1.3100 on Wednesday. Trade continues to wind down into the end of the year, and more of the same narrow range sessions should prevail until then. Friday will bring Canada retail sales data, which should keep activity muted through the overnight session.

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