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By XE Market Analysis November 25, 2020 2:34 pm
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    XE Market Analysis: Asia - Nov 25, 2020

    The Dollar was mostly lower in N.Y. on Wednesday, resulting in a fresh three-month low for the DXY. The index touched 91.92 lows, levels last seen on September 1. A barrage of incoming U.S. data was mixed, though overall weighed some on the Greenback. Revised GDP was unchanged from its initial print, while initial jobless claims were higher than expected, while earnings were soft, though expenditures solid. Factory orders rose more than forecast, while new home sales were stronger. The jobs data likely highlighted the potential deterioration of the labor market, as Covid cases run rampant. Wall Street was mixed through the session, with profit taking on the record highs on the Dow and S&P 500, and in particular the former following its record run over 30k on Tuesday. After lagging Tuesday, the NASDAQ rallied and hit a new record peak over the 12,000 level for a second straight day. Treasury yields were slightly lower.

    [EUR, USD]
    EUR-USD was rangebound through the N.Y. session, though managed a near three-month high of 1.1930 in London morning trade. The pairing opened near 1.1895, later printing a 1.1926 peak, before steadying near 1.1910. The avalanche of mixed U.S. data today had little impact on the USD, and it appeared traders were more focused on pre-Thanksgiving holiday position adjustments than anything else. Looking ahead, a close above the 1.1900 level could prompt some follow through buying overnight. EUR-USD has struggled to maintain the level for three-months, with September 1 being the last time a close over 1.1900 was seen.

    [USD, JPY]
    USD-JPY was held to a 104.26 to 104.46 trading range since the N.Y. open, remaining well inside of Wednesday's band. With London heading for the exits, activity can be expected to dry up quickly as U.S. players eye the door ahead of Thursday's Thanksgiving holiday. The Dollar overall has been choppy, with the DXY printing three-month lows earlier, after a short-lived rally on Tuesday. Bigger picture, the relative U.S. growth advantage, and hopes for a ramp-up in activity once vaccines are distributed, should keep USD-JPY downside contained for now.

    [GBP, USD]
    Cable rallied from 1.3327 in early N.Y., later making its way to 1.3394 highs before turning sideways. There was no news of a breakthrough in down-to-the-wire negotiations between the EU and UK, and there lots of warnings of border chaos and, of long-lasting economic consequences in the event of a no deal exit from the common market. The latest and supposedly final deadline, is next Tuesday -- December 1 -- which leaves just one month for a deal to be ratified on both sides of the Channel. We expect to a deal to materialize at the last minute, just as the withdrawal agreement was seemingly pulled out of the hat almost a year ago.

    [USD, CHF]
    EUR-CHF rallied to near three-month highs of 1.0871 in London on Wednesday, later falling back to 1.0820 as risk-off conditions developed. Positive Covid vaccine news, along with the formal start of the transition to a Biden presidency, turned sentiment higher on Tuesday. EUR-CHF has struggled to hold the 1.0800 level since the summer, and will likely remain altitude limited going forward unless the risk-backdrop holds up. In addition, the cross will remain under pressure should the ECB embark on further easing in December.

    [USD, CAD]
    USD-CAD printed better than two-week lows of 1.2990 after the close on Tuesday, later rallying to 1.3029 ahead of the North American open, before bottoming at 1.2987 at mid-morning. Eight-month high oil prices have kept the CAD on a firmer footing since yesterday, though moderate risk-off conditions this morning limited USD-CAD downside potential. The November 10 low of 1.2985 is the next downside target, followed by the two-plus year low of 1.2929 seen on November 9.

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