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By XE Market Analysis March 15, 2019 3:04 pm
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    XE Market Analysis: Asia - Mar 15, 2019

    Softer U.S. data along with lower Treasury yields dented the Dollar in N.Y. on Friday. The DXY pulled back from 96.79 highs to 96.49 lows into the London close. The Empire State index and industrial production missed the mark early on, though the Greenback perked up some following the better U. Michigan consumer sentiment outcome. EUR-USD printed two-week highs of 1.1344, from opening levels near 1.1300. USD-JPY dropped to 111.39 lows, while USD-CAD peaked at 1.3371 before pulling back into 1.3330. Cable rallied to 1.3300 highs from 1.3230 lows.

    [EUR, USD]
    EUR-USD peaked at two-week highs of 1.1344 after the 10:00 EDT U.S. data releases, since pulling back under 1.1315. The 50-day moving average at 1.1364 may have induced some pre-weekend selling interest. The Dollar had been under pressure for much of the week, as data misses, and lower Treasury yields weighed. A close under the 20-day moving average at 1.1318 today, could lead to some follow through selling when the new week kicks off.

    [USD, JPY]
    USD-JPY peaked at eight-session highs into the BoJ announcement overnight, topping at 111.90. From there, reports that North Korea may call off its missile moratorium, saw the pairing slide to 111.50 in London morning trade. Softer U.S. data, and accompanying lower Treasury yields weighed further, with the pairing bottoming at 111.38 in late morning dealings. The Dollar has since seen a slight recovery to the 111.60 region. The 200-day moving average at 111.42 remains an influence, though as long as risk appetite holds up, USD-JPY downside should be limited.

    [GBP, USD]
    Cable rallied through the N.Y. session, largely on Dollar softness, topping at 1.3300. May's Brexit Withdrawal Agreement will be voted on for a third time next Wednesday, where she is hoping that the fear of a soft, delayed Brexit or Brexit-cancelled scenarios will generate support from the hardline Brexiteers. It should be noted that the possibility for a no-deal Brexit remains, despite this week's indicative votes against it, as primary legislation dictates that the UK will leave on March 29. We don't expect this will happen as Parliament would step in should the government's Withdrawal Agreement fail at a third vote, which would likely deal May a political hammer blow. One risk is that it would only take one veto from the EU 27 member states against agreeing to a delay to deny the UK an extension, though the UK would still have the unilateral right to revoke Article 50 and terminate Brexit. This would be a deeply divisive course of action in the UK, but such a move, which seems highly unlikely at this juncture, would almost certainly be accompanied by a legally-binding referendum on EU membership. The pound is showing a 2.2% gain on the dollar from the lows seen on Monday.

    [USD, CHF]
    EUR-CHF has settled lower, in the mid 1.1300s, after posting a two-week high earlier in the week at 1.1385. The cross has continued on a relatively choppy path, the latest phase of which have been the current rebound after sharp Euro declines following the ECB's lending move last Thursday.

    [USD, CAD]
    USD-CAD earlier rallied to 1.3371 from overnight lows of 1.3297. The move came in concert with WTI crude prices selling off from four-month highs of $58.95 to $57.74 in early North American trade. Barring a big spike up in oil prices, downside potential for the pairing going forward would appear to be limited. Canada's economy is struggling, and the BoC for all intents and purposes, is done with its tightening cycle. As a result, the relatively outperforming U.S. economy should benefit the Greenback. USD-CAD later eased back to 1.3330, as crude prices recovered some.

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