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By XE Market Analysis October 11, 2017 3:26 pm
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    XE Market Analysis: Asia - Oct 11, 2017

    FX trade was relatively quiet through the N.Y. Wednesday morning session, with no data to drive markets, and a lack of interest to push levels ahead of the FOMC minutes release. The dollar was mixed overall however, seeing EUR-USD top at over two-week highs of 1.1858. USD-JPY meanwhile, held the 112 handle, topping near 112.50 into the minutes. The dollar slipped modestly after the minutes, though for the most part remained inside of intra day ranges. The minutes revealed concern by some members over persistently low inflation, while some said a slower pace of rate hikes could result in inflation overshooting. EUR-USD moved from 1.1840 to 1.1858 highs, while USD-JPY pulled back from session highs of 112.57 to 112.34.

    [EUR, USD]
    EUR-USD topped at 1.1858, above its 50-day moving average, before pulling back to either side of 1.1850, and then back to highs after the minutes. The "postponement" of Catalonia's independence call has given the euro some breathing room, though the matter is anything but settled yet. The dollar steadied some going into the FOMC minutes release this afternoon, and subsequently headed to session highs again.

    [USD, JPY]
    USD-JPY edged up to N.Y. session highs of 112.46, coming from early lows of 112.08. The pairing has since eased back to 112.35 on the back of N. Korea saber-rattling. USD-JPY has remained above its 200-day moving average (111.85) for the past two-weeks, remaining in buy-the-dip mode, and today has moved above its 20-day moving average at 112.20 after finding support under the level.

    [GBP, USD]
    Cable steadied after taking a Brexit-related hit, with Chancellor Hammond having warned that Britain needs to make contingency plans for a no-deal exit scenario from the EU. PM May also said during the weekly prime minter's questions in parliament that a no-deal scenario was a possibility. The general idea among most pundits and onlookers is that the government is seeking to strengthen its negotiating hand by sending a signal to the EU that it is prepared to walk away from the EU without any deal having been struck, either on divorcing terms or a new trading relationship. Such news tends to be taken negatively in the sterling market as a no-deal scenario conjures up spectres of customs chaos at borders (the port of Dover has warned of mega lines of trucks in such a scenario) and an instant hit to the UK's terms of trade. Cable logged a low of 1.3175, since recouping over 1.3200.

    [USD, CHF]
    EUR-CHF rallied to a two-week high at 1.1539 amid a broader pick-up in the euro after the Catalan leader managed to de-escalate tensions with Madrid by calling for a pursuit of dialogue. Former EUR-CHF resistance at 1.1488-90 and 1.1500 now revert as supports. We expect the franc to remain on a generally softer path. The SNB stated at its quarterly policy review last month that it remained committed to ultra-accommodative monetary policy settings, and that the Swiss franc "remains highly valued," even in light of the relatively sharp weakening the currency saw from late July.

    [USD, CAD]
    USD-CAD was on a slow drift lower through the morning session, taking its cue from the generally softer greenback, and firmed up WTI crude prices. The pairing had topped at 1.2530 overnight, before making its way to 1.2485 lows after the minutes. The 50-day moving average at 1.2464 now provides support, with Tuesday's 1.2555 top the next resistance level.

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