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By XE Market Analysis January 13, 2020 2:19 pm
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    XE Market Analysis: Asia - Jan 13, 2020

    The Dollar turned modestly lower overall in N.Y. on Monday, though remains near the top of its January trading range. There was no data to drive direction, though a generally risk-on backdrop saw some USD safe-haven outflows. Wall Street moved to fresh record highs, while Treasury yields moved higher as well. The U.S./Iran threat appears to have faded for now at least, while prospects for the signing of the U.S./China trade deal on Wednesday should keep risk-taking levels supported for now. EUR-USD rallied from 1.1118 to 1.1147 highs, as USD-JPY bucked the trend, peaking at 109.94, up from 209.62 lows in London. USD-CAD was range bound between 1.3055 and 1.3032. Cable steadied under 1.3000 through the session, after falling during the London mornings session.

    [EUR, USD]
    EUR-USD rallied modestly to four-session highs of 1.1147, above its 1.1139 200-day moving average. The pairing has recovered some from last week's losses, with Friday's softer U.S. employment report providing some support. The USD's yields advantage, should keep EUR-USD gains contained for the time being. The next resistance level comes at last Wednesday's top of 1.1170, with support coming at 1.1100-1.1085.

    [USD, JPY]
    USD-JPY printed seven-plus month highs of 109.94, up from overnight lows of 109.50. Ongoing risk-on conditions have seen the pairing tough higher highs for three-days running, driven partly by the planned signing of the U.S./China phase-one trade deal on Wednesday in Washington, along with firmer equities and Treasury yields. A USD-JPY move above 109.94 will see levels last seen on May 23 of last year. Japanese exporter offers are rumored to be sitting at the key 110.00 mark.

    [GBP, USD]
    Sterling consolidated losses seen during the London morning. Cable posted a rebound high of 1.2999, from the lows of 1.2961. The decline came following a drop in UK yields following sub-forecast November production and GDP data out of the UK, which followed hot on the heels of dovish-tilting remarks from BoE MPC members Vlieghe and Carney. UK December inflation data on Wednesday is expected to show a continued benign picture, with the CPI headline forecast at 1.5% y/y (median same), which would be unchanged from the month prior and remain well off the BoE's 2.0% mandated target. The UK OIS market is now fully factoring in a 25 bp BoE rate cut by September.

    [USD, CHF]
    EUR-CHF held above the 30-plus month lows of 1.0782 seen last Wednesday after Iran's missile strike on U.S. bases in Iraq. The cross managed a 1.0834 high, as geopolitical fears faded some. The selling on Wednesday was driven by the Franc's safe-haven status, coming on the back of geopolitical fears in the mid-east. As geopolitical fears faded, the cross headed up to 1.0831 highs on Friday.

    [USD, CAD]
    USD-CAD eased to 1.3032 lows at mid-morning North American trade, down modestly from the 1.3068 highs seen in overnight Asian dealings. Risk-on conditions have supported the CAD, with markets looking forward to the signing of the phase-one U.S./China trade deal, and the easing of U.S./Iran tensions. Oil prices remain relatively soft however, which will likely limit USD-CAD downside potential for now.

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