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By XE Market Analysis January 25, 2018 3:19 pm
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    XE Market Analysis: Asia - Jan 25, 2018

    The dollar was smacked down again in N.Y. morning trade on Thursday, taking the DXY to trend lows of 88.45. An upbeat ECB press conference lifted EUR-USD to multi-year highs of 1.2537, while USD-JPY touched 108.50. USD-CAD touched four month lows of 1.2283, while cable hit 19-month highs of 1.4345. Part of the morning's losses came undone later in the session as Trump said the dollar is going to get stronger and stronger, and ultimately I want to see a strong dollar, according to transcripts of his CNBC interview. Clearly there was some blowback on the Mnuchin "weak dollar ok" comments and perhaps the president felt the need to calm the waters ahead of his Davos speech tomorrow. USD-JPY shot back above 109.00 from 108.50 lows, while the euro toppled to 1.242 from the 1.248 area.

    [EUR, USD]
    EUR-USD shot higher during the ECB presser, topping at three-year highs of 1.2537, as ECB's Draghi spoke of strong growth, and hints at a shift in guidance at the March meeting. EUR-USD remained buoyant, though selling interest over the 1.2500 mark persisted into the London close. With potential for ECB policy guidance shifts, and Draghi's confirmation of a robust pace of economic expansion, euro bulls took charge. When coupled with the dismal dollar backdrop (and the Treasury Secretary all but endorsing the move), further EUR-USD gains can be expected.

    [USD, JPY]
    USD-JPY printed new four-month lows of 108.54, down from 109.15 highs early in the session. General dollar malaise has trumped the positive risk backdrop, which is usually yen-negative. The pairing can be expected to steady into tonight's Japan CPI data, where an expected firmer reading in the national price figures could weight further on USD-JPY.

    [GBP, USD]
    Cable clocked a fresh 19-month high at 1.4345, following EUR-USD's price action that was seen from Draghi's upbeat remarks on the Eurozone economy. Cable is now within 5 big figures of closing the gap created by the sharp slide in the pound in the wake of the UK's vote to leave the EU in 2016. UK Chancellor Hammond said earlier from Davos that the economic performance of the British economy has been better than most expected in the wake of the Brexit vote, which has indeed become part of the market narrative during the recent phase of sterling.

    [USD, CHF]
    USD-CHF was hammered lower earlier, falling from 0.9425 to 0.9290 lows, levels last seen in August of 2015. Part of the move was attributable to the steep advance in EUR-USD, though the CHF outperformed, as EUR-CH fell from near 1.1740 to 1.1626 lows, a one-month base. Some of the USD-CHF losses were likely technical in nature, with the break of 0.9420 (September 2017 bottom) seeing sellers rush in.

    [USD, CAD]
    USD-CAD sold off to four-month lows of 1.2296 following the strong ex-auto retail sales outcome. The pairing later topped at 1.2341 as WTI crude prices slipped, then subsequently dipped back to near session lows. USD-CAD is now likely to stabilize ahead of Friday's Canada CPI figures.

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