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By XE Market Analysis February 22, 2017 3:04 pm
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    XE Market Analysis: Asia - Feb 22, 2017

    The dollar was mostly higher in N.Y. trade on Wednesday, though did lose ground to the euro. EUR-USD rallied on headlines that French Centrist Bayrou will bow out of the election and back Independent Macron, giving him a better chance of defeating nationalist Le Pen. The pairing bounced from near 1.0500 to highs of 1.0565 later in the session. USD-JPY got a boost from EUR-JPY buying, again, driven by French politics, taking the dollar pairing to 113.65 highs from 113.06. USD-CAD traded over 1.3200 on the back of softer Canadian retail sales, while cable was mired on either side of 1.2450 through the session. Later, the greenback pulled back after the FOMC minutes, which gave no impression of urgency for a March rate hike. Yields moved lower as well, while Wall Street remained narrowly mixed as it had been through the session. EUR-USD rallied to session highs of 1.0572 from near 1.0525, while USD-JPY dove from 113.65 to 112.95.

    [EUR, USD]
    The euro bounced across the board after France political news hit the wires, lifting EUR-USD, EUR-JPY and EUR-GBP. French Centrist Bayrou will bow out of the election and back Independent Macron, giving him a better chance of defeating nationalist Le Pen. EUR-USD rallied to N.Y. session highs of 1.0565 from just under 1.0500, as EUR-JPY spiked up from near three-month lows of 118.80 to 119.85.

    [USD, JPY]
    USD-JPY traded briefly under the 113.00 mark early in the session, where buyers quickly stepped in. A bout of EUR-JPY buying later took the dollar pairing to 113.65 session highs. USD-JPY has traded on either side of its 20-day moving average, currently at 113.30, for a week now, and a close above it today should continue to solidify support above the level.

    [GBP, USD]
    Cable was fairly steady near its lows in N.Y. trade, idling on either side of 1,2450 through the session. Cable retraced most of its Tuesday gains. We continue to favour the downside given the contrasting policy stances of the Fed versus the BoE, and with upcoming Brexit negotiations likely rougher than smoother, with exit costs likely to be a contentious issue right from the get go.

    [USD, CHF]
    EUR-CHF got a boost in N.Y. trade on Wednesday, popping to eight session highs of 1.0677 from under 1.0640. The move came following news that French Centrist Bayrou will bow out of the election and back Independent Macron, giving him a better chance of defeating nationalist Le Pen. The franc's strength against the euro, which is a good proxy of the broader trade-weighted value of the Swiss currency, remains an ongoing concern for Swiss policymakers, though the SNB got a bit of a break today.

    [USD, CAD]
    USD-CAD rallied to two-week highs of 1.3209 after the soft Canadian retail sales data. The pairing had been on the rise through the London morning session, in response to lower oil prices. The 20-day moving average, currently at 1.3098 has provided support since Tuesday, and now, the 50-day moving average (1.3225) will mark initial resistance. The pairing later slipped back into 1.3160 following the FOMC minutes.

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