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By XE Market Analysis June 10, 2021 3:10 pm
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    XE Market Analysis: Asia - Jun 10, 2021

    The Dollar was choppy in N.Y. on Thursday, though ultimately ended the session slightly lower overall. Treasury yields initially popped on the back of the hotter U.S. PPI and better jobless claims data, which helped the USD at first, though yields later eased back toward Wednesday's lows, as markets continue to believe the Fed that inflation is transitory. The DXY subsequently pulled back, ending the session near 90.08, after ranging between 90.31 and 89.99. Wall Street looked through the surge in CPI, with major indices all higher into the close. Friday's U.S. calendar is light, with just the preliminary June University of Michigan consumer sentiment due, expected to improve to 84.0 from 82.9.

    [EUR, USD]
    EUR-USD rallied to session highs of 1.2195 after the ECB announcement, where the Bank inflation projections at its policy announcement. The "significantly" higher PEPP purchases the Bank stuck with later dented the pairing to 1.2143 lows. After later recovering to 1.2190, the pairing turned sideway on either side of 1.2170 through the afternoon session.

    [USD, JPY]
    USD-JPY rallied in the aftermath of the hotter CPI outcome, heading from near 109.45 into the open, and topping at 109. 80. Yields initially moved higher on the data, which supported the Dollar, though quickly reverted lower. The 10-yoear rate subsequently slipped from 1.53% to 1.47%., which took USD-JPY to session lows of 109.42. As expected, the market wobbled on the hotter CPI and the best readings on claims since the pandemic shutdowns. Yet, the data aren't seen impacting the FOMC's stance at the upcoming June 15-16 meeting. While the recovery in the economy could finally get the Fed to start thinking about tapering, and actually opening discussions.

    [GBP, USD]
    Cable rallied from near one-month lows of 1.4073, seen in London morning trade, to a top of 1.4174 after the London close. The UK will release April and second-revision Q2 GDP data on Friday, alongside April industrial production and trade data. Both the GDP and production data are expected to show strength. On the Covid front, delta varient cases continue to rise in the U.K., though so far, hospitalizations remain under control. Continued rise in cases could see the final end of lockdowns, expected to end on June 21, could possibly delay reopening, which could have, at the very least, have a psychological impact, and could well weigh on Sterling.

    [USD, CHF]
    The SNB continues to maintain its expansionary policy stance. The statement stressed that the pandemic "is continuing to have a strong adverse effect on the economy", adding that despite the "recent weakening, the Swiss franc remains highly valued" and against that background the policy rate was held at -0.75% and the bank stressed that "it remains willing to intervene in the foreign exchange market as necessary". The bank will also continue to supply the banking system with liquidity on "generous" terms. Nothing really new there, despite the fact that the SNB lifted its conditional inflation forecast on the back of higher oil prices and a weaker CHF. EUR-CHF briefly topped the key 110.00 mark for the first time in nearly two-weeks, though quickly turned lower, bottoming at 109.56, as the 50-day moving average at 1.1005 provided resistance.

    [USD, CAD]
    USD-CAD chopped higher, lower then higher again through the morning session, initially rallying on the hotter U.S. CPI print, before falling back as Treasury yields slid lower. From there a quick $1.00+ drop in WTI crude prices took USD-CAD back to 1.2115, though since then, oil's recovery back over the key $70 mark took the pairing under 1.2090. Crude oil remains in buy -the-dip mode for now, which should keep USD-CAD upside contained.

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