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By XE Market Analysis February 18, 2021 2:45 pm
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    XE Market Analysis: Asia - Feb 18, 2021

    The Dollar was rangebound in N.Y. on Thursday, though had lost ground overnight. The DXY traded a 90.56 to 90.79 trading band, later settling near mid-range. Incoming data was mixed, as jobless claims disappointed, and housing starts were lighter than expected. Firmer trade prices resulted in higher Treasury yields, which supported the Dollar at the margins, though higher inflation concerns have remained, which would offset any USD benefit. Fridays' U.S. calendar is light, with just existing home ales on tap.

    [EUR, USD]
    EUR-USD rallied some into the N.Y. open, from Asian lows of 1.2036 to 1.2090 early in the session. The pairing then settled into a narrow trading band through the remainder of the session, between 1.2062 and 1.2084. Incoming U.S. data was disappointing overall, though firmer trade prices supported Treasury yields, which subsequently gave the USD a modicum of support. Bigger picture, Europe's slow start to its vaccine program may ultimately have negative impact on how quickly the economy recovers, which can generally be taken as a Euro negative.

    [USD, JPY]
    USD-JPY is off its earlier lows of 105.60, bouncing to 105.88 at mid-morning, but under overnight highs of 105.93. The risk backdrop was a bit squishy overnight, supporting the risk-sensitive Yen, though since then, the interest rate sensitive pairing got a modest boost from U.S. Treasury yields heading to trend highs. USD-JPY support is now at 105.53, representing the 200-day moving average.

    [GBP, USD]
    Cable hit trend highs of 1.3996 in N.Y., up from 1.3840 lows seen in London morning trade. This continues the moderate outperforming bias the Pound has been exhibiting on the year so far. From here, the 1.4000 level is key psych resistance, a level not touched since late April, 2018. A driver of Sterling strength has been the quick rollout of Covid vaccines in the U.K., where 25% of the population has had one or two shots so far.

    [USD, CHF]
    Policymakers at the SNB retain an ongoing concern about the Franc's value. Unlike most central banks, the SNB explicitly incorporates the franc into monetary policy to ward off speculative purchases of the currency, which would impart deflationary forces (via cheaper imports) with the consequential impact of an unwelcome tightening in real interest rates. The central bank repeated at its latest quarterly monetary policy review that the franc remains "highly valued" and said it is ready to intervene directly in the foreign exchange market. The cross has maintained a broad about 1.0750 to 1.0850 range since the start of the year.

    [USD, CAD]
    USD-CAD headed lower overnight, as oil prices rallied to trend highs. The pairing dropped from London highs of 1.2709 to 1.2665 in early North America. USD-CAD has since headed back to 1.2730 highs, as WTI crude headed under the $60.00 mark, from $62.27 seen in early Asia. In addition, after losing ground in London, the DXY has moved off its lows in N.Y. morning trade, also supportive of USD-CAD. USD-CAD resistance now comes at 1.2743 and 1.2747, which represent the 20- and 50- day moving averages, respectively.

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