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By XE Market Analysis October 3, 2019 2:42 pm
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    XE Market Analysis: Asia - Oct 03, 2019

    The Dollar nose-dived to seven-session lows in N.Y. trade on Thursday, the move coming in the aftermath of a big miss in the services ISM. The DXY fell from 99.06 highs at the open, to 98.65 lows, before recovering slightly. The weaker data ramped up recession fears and prospects for another Fed rate cut in October, both detrimental to the USD. Wall Street and Treasury yields tumbled on the ISM outcome, though while yields stayed down, stocks managed a rally, largely on short covering interest. EUR-USD topped at 1.0999, up from session lows under 1.0950. USD-JPY hit one-month lows of 106.49, down from 107.12 highs. USD-CAD had printed one-month highs of 1.3347 on weak oil prices, later falling to 1.3310. Cable meanwhile, had been on the rise into the data, though rallied further, peaking at 1.2410. FX trade will likely slow overnight, as traders await the key September U.S. jobs report on Friday morning.

    [EUR, USD]
    EUR-USD opened the session at lows near 1.0950, and was steady into the U.S. services ISM. From there, a three-year low outcome ISM print saw the pairing vault to 1.0999 highs, as the Dollar overall, and Treasury yields headed lower. The pairing steadied between the highs and 1.0975 through the remainder of the session. Major Dollar pairings are liable to turn sideways through the overnight session, as traders anticipate the U.S. employment report on Friday. The jobs report may go some way in solidifying the growth outlook and the Fed's policy path, and hence, future USD direction.

    [USD, JPY]
    USD-JPY bounced from near one-month lows of 106.87 seen into the N.Y. open, topping at 107.12 into the ISM data. The pairing slid to new trend lows of 106.48 after the data, taking its cue from a sharply lower Wall Street and a dive in Treasury yields. Heightened odds for another Fed rate cut at the end of October will likely keep a cap on the pairing for the time being.

    [GBP, USD]
    Sterling headed higher in London as it has become clear that there is quite broad parliamentary support for Prime Minister Johnson's Brexit proposals -- including, most notably, from Northern Ireland's DUP Party. Cable rallied from sub-1.2300 levels to a high of 1.2387, into the N.Y open, an eight-day high. Following the weaker U.S. services ISM, the pairing ran up toward 1.2415.

    [USD, CHF]
    EUR-CHF has continued a conspicuous rally, which is now in its third consecutive day, with the cross now in three-week territory above 1.0970. Suspicions of SNB intervention abound, which makes sense from a tactical perspective, to stand aside when then cross was downward trending amid broader euro underperformance and then to step in when EUR-USD is on the ascent.

    [USD, CAD]
    USD-CAD rallied to one-month highs of 1.3347 early in the session, as WTI crude traded to near two-month lows just above $51/bbl. The weaker U.S. services ISM turned things around for the pairing, as the data resulted in a broad USD sell-off. Later, the improvement in risk taking levels following Wall Street's recovery from sharp post-data losses, allowed oil prices to recover over $52, which put further pressure on USD-CAD, seeing a 1.3310 low. The pairing closed above its 200-day moving average at 1.3294 on Wednesday for the first time in a month, and now becomes a decent support level.

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