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By XE Market Analysis October 9, 2020 3:05 pm
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    XE Market Analysis: Asia - Oct 09, 2020

    The Dollar was under pressure on Friday, leaving the DXY at three-week lows of 93.04, and three straight sessions of losses. Risk-on conditions again prevailed into the weekend, as hopes were raised for a stimulus package after Trump said he was on board with a $1.8 tln aid package. It remains to be seen if House Democrats will agree. Wall Street was nonetheless higher, while Treasury yields dipped. Safe-haven USD demand has reversed course to a degree following three days of Wall Street gains. As long as better risk-taking levels prevail, the Greenback likely has further downside potential. For data, wholesale sales figures were better than consensus, but had little impact on the markets. EUR-USD rallied from opening lows of 1.1793 to a three-week high of 1.1824. USD-JPY fell from 105.95 to 105.61 lows. USD-CAD touched one-month lows of 1.3115, down from 1.3180 following a strong Canada jobs report. GBP-USD, meanwhile, printed a one-month high of 1.3036.

    [EUR, USD]
    EUR-USD printed three-week highs of 1.1824 in late morning trade, up from 1.1793 lows at the open. Trade has been light overall, though the risk-backdrop has tended to see the Dollar generally under pressure through the morning. Initial support comes at the 50-day moving average at 1.1801, followed by the 20-day moving average, currently at 1.1755. With many on holiday Monday for Columbus Day, activity largely dried up after the London close.

    [USD, JPY]
    USD-JPY recovered slightly from earlier lows of 105.61, bouncing to 105.74 into the London close, likely on pre-weekend short covering. The pairing opened the session near 105.95. The Dollar overall remains heavy though, as risk-on remains, and Wall Street posted its third day of gains on hopes for a new stimulus package. Next resistance level is the 50-day moving average at 105.81, with support at Wednesday's low of 105.60.

    [GBP, USD]
    Cable rallied through the N.Y. session, opening at 1.2932 lows, later peaking at one-month highs of 1.3036. The move came on general USD weakness, and despite UK August production and monthly GDP data missing the mark. The outlook isn't good given the surge in new Covid cases in the UK. New restrictions will have a negative impact on economic activity. As for Brexit, the next week should be decisive. Despite the public brinkmanship and some confusing headlines, there have been reports from behind the scenes of motion toward finding a compromise on key issues from both UK and EU sources. This remains to be seen. For now, GBP-USD would appear to have two-way risk.

    [USD, CHF]
    EUR-CHF remained under 1.0800 in N.Y on Friday, trading from near 107.80 to the mid 1.07s. The SNB remains committed to limiting gains in the franc. At its quarterly monetary policy review last month, it stated that the franc remains "highly valued" and said it is ready to "intervene more strongly in the foreign exchange market". The cross has repeatedly failed to sustain gains above 1.0800 over the last couple of months, even though influence of the SNB's intervening hand may have been at play during the recent upside bursts.

    [USD, CAD]
    USD-CAD fell to near four-week lows of 1.3115 from 1.3175 after the much better Canada September jobs report, which more than tripled the estimated number of new jobs. The CAD had been on the rise since Thursday, as oil prices headed to three week highs. The next support level comes at 1.3128, the September 16 lows.

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