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By XE Market Analysis July 18, 2019 12:46 pm
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    XE Market Analysis: Asia - Jul 18, 2019

    The Dollar attempted to rally in N.Y. on Thursday following in-line jobless claims, and a stronger than expected Philly Fed index, though later faded as Wall Street sold off and Treasury yields pulled back from highs. The DXY opened at 97.16 lows, rallied to 97.25 highs, before fading to 97.13. EUR-USD bottomed at 1.1215 after the early data, then make its way over 1.1230, while USD-JPY peaked at 108.01, later falling back under 107.80. USD-CAD was an outlier, topping just under 1.3100 as oil prices plunged better than 3%. Cable meanwhile, ranged between 1.2465 and 1.2500.

    [EUR, USD]
    EUR-USD has remained above Wednesday's seven-session low of 1.1200, bottoming at 1.1205, after peaking at 1.1244 (the pairing's 50-day moving average) in London morning trade. The Euro continues to find solid support into the 1.1200 level, though risk for the EUR remains from the ECB, with a shift to an explicit easing bias expected by many at next week's meeting, or at subsequent meetings. EUR-USD support comes at the July 9 low of 1.1193, with resistance remaining at the 50-day moving average at 1.1244.

    [USD, JPY]
    USD-JPY recovered some from the better than two-week lows printed overnight, trading over 107.90 from lows of 107.62. The pairing closed under its 20-day moving average of 108.00 on Wednesday, which now becomes the next resistance level. General risk-off conditions, led by global slowing,trade war threats, and wobbly equity markets, will likely continue to support the risk-sensitive Yen, with upside USD-JPY potential expected to be limited.

    [GBP, USD]
    Cable printed a fresh two-day high at 1.2494, extending the rebound from yesterday's 27-month low at 1.2382. News that UK Parliament has backed a new amendment aimed at blocking a no-deal Brexit was a clear buying cue for market participants. Backbench members of parliament are attempting to to block the reported desire of Boris Johnson (who is likely to become the new prime minister next week) to suspend parliament as a means to drive the UK out of the EU without a deal. Given the amendment passed with a solid 41 majority, Boris, assuming he does become the new PM, may well be tempted to risk calling a general election.

    [USD, CHF]
    EUR-CHF remained above the two-year low of 1.1056 seen in N.Y. on Tuesday, coming on the back of weak Germany ZEW figures, which weighed on the Euro, helping the cross lower. The pairing advanced to 1.1089 in N.Y. on Thursday, though faded again on General Euro weakness. The advance of the Franc against the Euro will be displeasing to the SNB (the EUR-CHF cross being a good proxy on the Swiss currency's trade weighted value). The SNB restated at its quarterly policy review last month that downside risks to the economy have increased, and that the overall policy setting "remains as expansionary as before." With the ECB increasingly under pressure to ease policy again, the SNB remains eager to counter Franc appreciation, especially against the Euro. Assuming the ECB remains on the path of further monetary policy easing, we would expect EUR-CHF retain a declining bias.

    [USD, CAD]
    USD-CAD traded a narrow range overnight, bottoming at 1.3042 in Asia dealings, before rallying to 1.3063 in early North America. The USD was on a slightly lower path overall after the U.S. close on Wednesday, though has perked up a bit into the open. Oil prices perked up some early in the session, though USD-CAD later headed to session highs of 1.3095, a seven-session top, dragged up by another oil price sell-off. WTI crude was down better than 2% on the day, trading under $55.50. The pairing runs into the 20-day moving average at 1.3098, and above there, buy-stops are likely over the 1.3100 mark.

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