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By XE Market Analysis October 10, 2018 2:14 pm
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    XE Market Analysis: Asia - Oct 10, 2018

    The Dollar index fell to one-week lows of 95.38 in N.Y. on Wednesday, with losses coming on the back of a fairly hefty meltdown of risk appetite. Wall Street was crushed lower, and as Treasury yields pulled back some from trend highs. EUR-USD topped at 1.1545 after opening near 1.1490. Risk-sensitive USD-JPY took it on the chin, falling to 112.60. USD-CAD bucked the trend, rallying toward 1.3000, as oil prices fell sharply. Cable remained bid, topping at 1.3213.

    [EUR, USD]
    EUR-USD rallied to highs of the week, topping at 1.1545, and up from pre-open lows of 1.1480. Concerns about Italian budgetary prudence have continued to linger, although BTP yields came off their highs today, likely allowing the Euro to rise modestly.

    [USD, JPY]
    USD-JPY has fallen to two-week lows of 112.60, coming from 113.25 after the open. The bulk of losses came following Wall Street's open, which has seen stocks slide significantly, and impacting the risk-sensitive Yen. Support comes at 112.55, the September 27 low.

    [GBP, USD]
    Cable posted a fresh near three-week high at 1.3213, a move that tracked a pop higher in EUR-USD. The pound found some buoyancy by a London Times article claiming that 30 Labour party MPs will reportedly back Prime Minister May's Brexit plan, suggesting that there could be enough votes for the plan to pass a parliamentary vote (as this would offset rebels in May's own Tory party who are planning to vote against it). There still remains much uncertainty with regard Brexit, not least about how the UK and EU will overcome the Irish border backstop problem.

    [USD, CHF]
    EUR-CHF headed up toward the 1.1445 region, aided by EUR-USD's bounce back over 1.1500. The gain the cross saw last week reflected a pricing-out of safe haven positioning after the Italy's coalition government produced a EU-appeasing budget, although concerns remain.

    [USD, CAD]
    USD-CAD was relatively quiet in morning trade, about in the middle of its one-week trading range at 1.2960. The pairing later edged up to near 1.3000, as WTI crude slid nearly $2, to under $73.00. With the U.S./Canada trade deal wrapped up, and oil prices set to remain firm into the U.S. sanctions on Iran, USD-CAD should remain in sell-the-rally mode. Sellers have been quick to step in on moves over 1.3000 this week, and we expect more of the same.

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