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By XE Market Analysis February 14, 2020 2:38 pm
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    XE Market Analysis: Asia - Feb 14, 2020

    The DXY printed its ninth-straight higher daily high on Friday, though eased back through the session on profit taking activity. Incoming U.S. data saw in-line retail sales and industrial production, slightly firmer than expected import prices and a better than expected University of Michigan consumer sentiment index. EUR-USD peaked at 1.0862 before pulling back under 1.0835. USD-JPY rallied to 109.89 early, later falling to 109.69 as Wall Street turned lower. USD-CAD traded sideways between 1.3235 and 1.3260, while Cable fell to 1.3001, later recovering over 1.3045.

    [EUR, USD]
    EUR-USD printed its ninth-consecutive lower daily low in early Asia on Friday, posting a fresh 34-month low at 1.0827, and set for its biggest two-week loss since July 2019. The pairing made its way to 1.0862 highs in N.Y. morning trade, with London short covering into the weekend noted. The pairing later eased back under 1.0835, for a soft end to the week. The market theme of a relatively stronger U.S. economy, which has been driving the Dollar higher so far this year, remains in place. That plus demand for safe-haven Treasuries has seen the DXY rally to four-month highs over 99.00 from lows of 96.40 at the start of the year.

    [USD, JPY]
    USD-JPY put in an inside day on Friday, peaking at 109.89 early in N.Y. trade, later basing at 109.69, before settling between 109.70-80. Risk taking levels were rather neutral through the session, with yields and stocks relatively steady. This allowed USD-JPY to drift near the middle of this week's trading range. Looking ahead, the coronavirus epidemic remains a wild card, with further spreading and deaths likely to keep markets spooked and USD-JPY weighed down.

    [GBP, USD]
    Cable fell from levels above 1.3060 to a 1.3001 low in early N.Y. Demand for EUR-GBP appeared to have driven GBP-USD lower, with the cross rallying nearly half a big figure to levels above 0.8340. Political developments have seen UK Prime Minister Johnson strengthen his power, most notably with resignation of Chancellor of the Exchequer Sajid Javid, who was replaced by Rishi Sunak, which effectively green lights a fiscally expansive policy to finance major infrastructure projects. On the negative side are persisting concerns about Brexit. The government has clearly signaled that it aims for divergence from the EU, and leave, without a new trading agreement if necessary.

    [USD, CHF]
    EUR-CHF bounced over 1.0650 on Friday, with short covering driving the move, after once again falling further into major-trend low territory on Thursday, printing a base at 1.0608, the lowest level seen since August 2015. The pronounced losses the cross has been seeing are partly a product of safe-haven demand for the franc, and partly as a lasting consequence of the surprising decision by the U.S. to add Switzerland to its list of currency manipulators last month.

    [USD, CAD]
    USD-CAD held above its recent low of 1.3232 seen on Wednesday, bottoming at 1.3233 early in North American trade, since idling between 1.3250-60. WTI crude's uptick to two-week highs over $52.30/bbl have limited USD-CAD gains through the morning session, though relative to oil prices seen at the start of the year, over $65/bbl, current prices remain a drag on the CAD. Crude prices will continue to drive USD-CAD direction, while impact on Canada's economy due to the coronavirus outbreak will factor in as well. Canada's finance minister on Monday said there would be “impacts on tourism, impacts on the oil sector and of course impacts on the supply chain”.

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