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By XE Market Analysis May 24, 2018 1:46 pm
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    XE Market Analysis: Asia - May 24, 2018

    Firmer jobless claims, and softer existing home sales, and the U.S. pullout of the summit with North Korea combined to dent USD sentiment in N.Y. trade on Thursday. USD-JPY was impacted the most on the NK story, falling back to lows of 108.96 from highs over 109.70. EUR-USD rallied to 1.1750 highs. USD-CAD firmed up some as WTI crude prices rolled lower, while cable steadied on either side of 1.3400.

    [EUR, USD]
    EUR-USD topped at 1.1750 following the softer U.S. housing data, and announcement the U.S./N. Korea summit had been canceled, which saw Treasury yields move lower. The pairing has since moved back to 1.1717 lows, as Italy remains a drag on the euro overall, with the political situation not sorted out there just yet. We look for further downside potential for EUR-USD, as a result of the politics, and apparent slowing of EU growth.

    [USD, JPY]
    USD-JPY slid on the news that the U.S./N. Korea summit was canceled, taking the pairing from earlier session highs over 109.70 to a low of 108.96. Prospects for the summit had helped lift USD-JPY to multi-month highs of 111.39 seen on Monday, though with risk-off conditions back, the yen is on the rise.

    [GBP, USD]
    Cable lifted to a high of 1.3422 in London, over a big figure up from yesterday's five-month low at 1.3305. A softer dollar following the release of the minutes to the early May FOMC meeting, which should keep the Fed remaining in a patient mood with regard to tightening, has helped the pair, and today's release of above-forecast UK retail sales providing added buoyancy.

    [USD, CHF]
    EUR-CHF managed to remain above Wednesday's 11-week low at 1.1582, bottoming at 1.1589 after the U.S. pulled out of the North Korea summit. The cross is down nearly 1.7% over the last week, which is the biggest movement over this period out of the dollar pairings and cross rates that we keep tabs on, declining for what is now an eighth consecutive session. The driving dynamic has been a souring sentiment towards the euro on concerns about the policies of the newly forming anti-establishment and Eurosceptic coalition government in Italy. EUR-CHF is down by 3.2% from the 41-month that was printed a month ago at 1.2005, which was the culmination of a 10-month rally phase, and which in turn was a reflection of what had been -- before recently -- a sense of abating existential risks that the Eurozone was facing. Now things look to be trending back in the other direction. Yesterday's breach and close below the 200-day moving average, presently at 1.1693, was, for technical analysts, a significant bearish signal. Trend resistance is at 1.1722-24.

    [USD, CAD]
    USD-CAD peaked at 1.2921, an eight-session top, as oil prices fell sharply earlier in the session, on reports that OPEC and Russia may phase out production caps. As WTI crude recovered some, USD-CAD eased back to 1.2886 lows, though remains higher on the day. NAFTA uncertainty will keep downside contained until a better feel for the outcome is known, though recent comments from negotiators have painted a fairly cloudy picture.

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