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By XE Market Analysis June 22, 2018 2:52 pm
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    XE Market Analysis: Asia - Jun 22, 2018

    The DXY printed lows of 94.51 in N.Y. on Friday, down from highs of 94.79, though above the seven-session bottom of 94.44 seen in London. Aside from softer flash manufacturing and services PMIs, there was no data on Friday. EUR-USD peaked at 1.1666, fell to 1.1618 lows, then re-tested the highs into the close. USD-JPY fell to 109.81 lows from 110.15 at the open, and settled just under 110.00. USD-CAD posted one-year highs of 1.3378 after dismal retail sales and cooler CPI data, while cable edged under 1.3250 in thin afternoon trade.

    [EUR, USD]
    EUR-USD dipped to 1.1618 lows at mid-morning, after early highs of 1.1666, though has since moved back to test the top again. Above-forecast composite Eurozone PMI survey readings gave the euro a lift, while the dollar more broadly has softened into the weekend. Opposing monetary policy outlooks from the ECB and the Fed will likely keep the euro contained going forward. The 30-day moving average at 1.1675 remains resistance, where the pairing interestingly was capped in London morning trade.

    [USD, JPY]
    USD-JPY traded briefly under its 20-day moving average of 109.87, bottoming at 109.81, after running into sellers into its 200-day moving average at 110.25 overnight. Fundamentals and yields continue to favor the dollar, though given the risk sensitivity of the yen, dollar bulls may have to be patient.

    [GBP, USD]
    The pound has established a higher trading range in the wake of yesterday's BoE announcement and minutes. Cable has gained nearly two big figures in making a high of 1.3315 in N.Y. on Friday. An increased rank of three MPC members calling for a 25 bp hike in the repo rate boosted both UK yields and the pound. Given Brexit worries, we continue to see Cable as more likely to form a range in the lower 1.30s than to commence a sustained rally.

    [USD, CHF]
    EUR-CHF reclaimed the 1.15 handle on Friday. The cross has been under pressure since the ECB's dovish guidance signal of last Thursday. EUR-CHF is now about midway levels of the range that's been seen over the last three weeks. The ECB's policy stance should ensure that the SNB remains resolutely committed to its ultra-accommodative monetary policy setting in an attempt to ward off, or at least limit, franc gains against the euro. Indeed, the NB's Jordan said that the bank sees no need to change policy at this point, while Maechler admitted that the end of the ECB's QE program presents a big challenge.

    [USD, CAD]
    USD-CAD spiked up to fresh one-year highs of 1.3378 from 1.3280 following the dismal retail sales outcome, and much cooler CPI readings. The pairing had been on the decline overnight on the back of firmer oil prices, bottoming at 1.3264 in London. The retail sales data will put a dent in April GDP. USD-CAD later pulled back to 1.3279. The sharp rise in oil prices prompted some profit taking, though with NAFTA still an unknown, and incoming soft Canadian data reducing the chances for a BoC rate hike next month, we continue to see USD-CAD in buy the dip mode.

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