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By XE Market Analysis October 9, 2019 2:22 pm
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    XE Market Analysis: Asia - Oct 09, 2019

    The Dollar turned lower ahead of the N.Y. open on Wednesday, with losses coming on the reversal of safe-haven flows seen on Tuesday, reversed following reports that China would consider a partial trade deal with the U.S. Later, the USD posted a partial recovery, seeing the DXY move from 98.90 lows to 99.15 highs after the London close. Wall Street and Treasury yields moved higher as well. Incoming data was light, with only the wholesale report on tap, which has little impact on the market. EUR-USD stalled under the 1.1000 mark, later easing back to 1.0970. USD-JPY peaked at 107.62, up from near 107.35 at the open. USD-CAD topped at 1.3320 from lows just under 1.3300, while Cable gave back its London gains, bottoming at 1.2197.

    [EUR, USD]
    EUR-USD reversed Tuesday's losses, rallying to 1.0990 into the N.Y. open. The move higher came following reports that China was open to a partial trade deal, and would buy additional U.S. agriculture products. This resulted in Tuesday safe-haven flows into the USD being unwound. Yesterday's news of the U.S. blacklisting Chinese companies, and the impact that may have on trade talks currently under way in Washington was a likely driver of the USD gains then. The 1.1000 level remains key for EUR-USD, with Wednesday marking the fifth consecutive session that EUR-USD has tried and failed to break through the level.The pairing later slipped back to 1.0970 lows.

    [USD, JPY]
    USD-JPY was a bit stronger through the, rallying to 107.48 highs, and remaining above the 107.30 mark. Better risk taking levels brought buyers in, as hopes for progress on the U.S./China trade war got a lift into Thursday's high-level meetings in Washington. China said earlier it was open to a partial trade agreement. Given the history of the talks however, a smooth outcome is anything but guaranteed, and Yen bears will have to remain on their toes.

    [GBP, USD]
    Cable was crushed to one-month low of 1.2195 in N.Y. morning trade, down from London highs over 1.2300. The BBC cited a UK government source saying that Germany's Merkel conveyed to PM Johnson that a deal based on his government's proposals was "overwhelmingly unlikely.". The development makes it a near certainty that Johnson won't have a deal by the October-19 deadline set out in the newly created parliamentary bill that would require the prime minister to ask the EU for an extension in Brexit to January 31.

    [USD, CHF]
    EUR-CHF recovered to 1.0930 from Tuesday's post-close low of 1.0870. An improvement in risk appetite helped lift the cross, as China indicated it might agree to a partial trade deal. In the U.K., Brexit concerns eased, with most now thinking a delay and a new election is in the cards.

    [USD, CAD]
    USD-CAD headed to 1.3295 lows ahead of the North American open, down from Asian highs of 1.3325. The modest sell-off came as oil prices rallied on news there may be some progress on the U.S./China trade front. The 200-day moving average at 1.3288 remains a good support level, with the pairing holding above the level for nearly a week now. Further oil price gains could see a break though, with the next downside target being the 1.3260-70 region.

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