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By XE Market Analysis January 8, 2018 2:16 pm
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    XE Market Analysis: Asia - Jan 08, 2018

    The dollar was marginally firmer in N.Y. trade on Monday, though major pairings remained inside of relatively tight ranges. EUR-USD touched lows of the year at 1.1960, while USD-JPY was a bit heavy on the back of modest Wall Street losses, bottoming at 112.89. USD-CAD was pushed lower by an upbeat BoC outlook survey, while cable gyrated in the mid-1.35s.

    [EUR, USD]
    EUR-USD made its way to 1.1960 at mid-morning, its lowest since December 29, when it bottomed at 1.1937. We had noted a topping pattern last week, and with those lows between 1.2021 and 1.2002 now breached, there may be downside room toward the 20-day moving average of 1.1885.

    [USD, JPY]
    USD-JPY touched session lows of 112.89 after printing two-week highs of 113.39 during the London morning session. The mild bout of risk-off conditions seen on Wall Street this morning, coupled with softer Treasury yields ha prompted some USD-JPY profit taking. The 50-day moving average at 112.89 has so far provided support.

    [GBP, USD]
    Cable about matched Friday's trading range, topping at 1.3585 after bottoming at 1.3522. There were few leads for the sterling market to go on, aside from aqn uptick in U.K. productivity. Brexit-related news or developments, meanwhile, have been thin so soon after the holiday period. Formal negotiations with the EU on a post-Brexit trading relationship are due to start in March. This week's UK calendar is fairly quiet, highlighted by the private BRC retail sales survey for December (Tuesday) along with November production and trade data (Wednesday).

    [USD, CHF]
    EUR-CHF fell back to 1.1684 lows on Monday, largely as EUR-USD dipped to 2018 lows. On Friday, the cross rallied over the 36-month peak seen last week at 1.1777, topping at 1.1778 in London trade. Over the last six months, the franc has seen its biggest weakening, both against the euro and in trade-weighted terms, since the Eurozone crisis took hold back in 2010. The Eurozone has seen political threats diminish, which has been accompanied by steady and assured pickup in growth momentum. This backdrop, along with the enticement of the SNB's -0.75% deposit rate, have seen the franc unwind any vestiges it had of being a safe haven currency. Assuming the Eurozone can continue to conquer political threats, and assuming the SNB remains anchored to ultra-accommodative monetary policy, which looks likely to be the case for the foreseeable (the central bank reaffirmed this commitment at its recent quarterly policy review), we anticipate EUR-CHF will make an eventual return to 1.2000, which was the former floor the central bank maintained until January 2015.

    [USD, CAD]
    USD-CAD printed intra day highs of 1.2429 at the North American open, with domestic short covering reportedly behind the move up from earlier 1.2388 lows. WTI crude prices pulled back to $61.58, after failing to take out the $62.00 level, which has also been supportive of USD-CAD. The pairing later jumped to near 1.2450 from just over 1.2420 after the BoC's Q4 outlook survey, though quickly fell back to North American session lows of 1.2401. The survey was fairly upbeat, though initial CAD weakness may have been due to headline stating survey respondents were "increasingly nervous" about NAFTA talks. The correct direction still appears to be to the downside, as the survey supports a 25 basis point rate hike next week.

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