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By XE Market Analysis January 11, 2017 2:39 pm
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    XE Market Analysis: Asia - Jan 11, 2017

    The dollar and Wall Street were bid up ahead of the Trump press conference, though volatility spiked up as the president-elect spoke, resulting in stocks and yields diving, and the dollar turning sharply lower as profit taking set in. Trump's comments on curbing drug prices and military spending got the ball rolling, taking major equity indices from decent gains to decent losses. Overall though, the president-elect gave away few details on what his administration will focus on beginning on January 20. EUR-USD based at 1.0459 early, before ramping up to 1.0617 during the presser. USD-JPY meanwhile, topped at 116.87 before plunging to 114.25 lows. USD-CAD was bid up to 1.3294 highs on soft oil prices though as WTI crude recovered, and the greenback faded, the pair fell to 1.3125. Cable recovered from three-month lows of 1.2038, topping at 1.2272.

    [EUR, USD]
    EUR-USD recovered from early session losses, and then some, rallying to 1.0617 highs, after touching 1.0459 lows in the lead-up to the Trump press conference. Yields, equities and the dollar were all volatile through the presser, and when all was said and done, the squaring of long USD positions was the universal response.

    [USD, JPY]
    USD-JPY crashed off earlier highs in the midst of the Trump press conference, where apparently his comments on drug prices dragged down pharma stocks, and indeed, all major indices as well. The pairing fell to 115.71, down from pre-conference highs of 116.87, before bouncing to 116.58, then plunging under 114.30, a better than one-month low, as Wall Street turned decent gains into decent losses, and as yields fell back.

    [GBP, USD]
    Cable traded below 1.2100 for the first time since October in the wake of the UK trade data, which showed an unexpected GBP 2.6 bln spike in the deficit in November. The pairing bottomed at 1.2038, levels last seen on flash crash day, before bouncing to 1.2272 during the Trump presser, when volatility in all markets spiked.

    [USD, CHF]
    EUR-CHF has settled above 1.0700 after logging a two-week low at 1.0680 last week. The franc's strength against the euro, which is a proxy of the trade-weighted value of the Swiss currency, will be an ongoing concern for Swiss policymakers given the deflationary impact of franc strength, although Swiss December CPI last week lifted to 0.0% y/y from -0.3% y/y in the previous month, breaking a run of 25 consecutive months of negative prints. This compares to an average CPI rate of -0.4% y/y for 2016.

    [USD, CAD]
    USD-CAD extended its gains to a one-week high of 1.3294 following the bearish EIA oil inventory report. The pairing had been on the rise from early in the session, piggybacking on the broad USD advances seen this morning. Option backed offers were rumored to be in place from 1.3300, though as oil prices recovered, and as the greenback came under broad pressure following Trump's press conference, the pairing slid back into 1.3120 lows.

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