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By XE Market Analysis October 13, 2020 2:09 pm
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    XE Market Analysis: Asia - Oct 13, 2020

    The Dollar was broadly higher in N.Y. on Tuesday, taking the DXY to 93.50 highs from early lows of 93.13. Risk-off conditions saw safe-haven demand for the USD pick up. Wall Street took a breather, posting losses after soaring on Monday. News of J&J's pausing of their Covid vaccine trial weighed, while the market cooled to chances of a new stimulus package before the November election. Treasury yields moved lower on the session. For data, September CPI came in as-expected, and had no market impact. EUR-USD fell to 1.1731 lows from early highs just under 1.1800. USD-JPY rallied slightly from early lows of 105.46 to a high of 105.63. USD-CAD started at 1.3099, later peaking at 1.3147. GBP-USD meanwhile, fell to 1.2950 from opening levels over 1.3030.

    [EUR, USD]
    EUR-USD headed from early highs of 1.1799 to a low of 1.1731 into the London close. The pairing had topped at 1.1816 after Monday's close. Risk-off conditions supported the Dollar broadly through the session, as virus jitters flared up after J&J paused its Covid vaccine trials, and as the odds for new fiscal stimulus continue to fade. Germany's weaker ZEW investor confidence didn't help the Euro's fortunes either. The pullback in the expectations reading revealed concerns that the still fragile European recovery will be halted by virus developments. Overnight, selling interest was also evident over the 50-day moving average, which sits at 1.1801. EUR-USD is under its 20-day moving average at 1.1747, which will mark interim resistance.

    [USD, JPY]
    USD-JPY printed seven-session lows of 105.24 on Monday, since recovering to 105.63 highs in N.Y., after opening near 105.50. Risk-off concerns, including J&J's vaccine pause, fading hopes for another round of U.S. fiscal stimulus, along with rising Covid cases in Europe and North America, has seen the Yen rise versus most currencies, though remains fairly steady against the USD, as both currencies tend to move in the same direction on shifting risk-taking movements. USD-JPY support now comes at the 20-day moving average at 105.39, with resistance at the 50-day moving average, currently at 105.79.

    [GBP, USD]
    Cable dropped from London highs of 1.3068, and spent the N.Y. morning session slipping to 1.2950 lows seen after the London close. The move lower was a combination of broad USD strength, and aome Sterling weakness. Markets remain nervous with the future relationship talks between the EU and UK now at make-or-break stage. We still expect a limited free trade agreement given the explosive economic impact a no-deal exit will have A no-deal scenario cannot by ruled out, and any news of a deal would likely boost sterling over the near term, but even with a deal, and even with the UK's progress in signing continuity agreements with non-EU trading partners, the UK will see its terms of trade position deteriorate, leaving the pound exposed to further losses.

    [USD, CHF]
    EUR-CHF was mired in the low to mid-1.07s in N.Y. on Tuesday. A moderate risk-off session kept a cap on the pairing through the session. 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 has rallied from one-month lows of 1.3099 seen early in the session to 1.3147. The pairing was dragged higher by a broadly firmer USD, the result of modest risk-off conditions. Crude oil prices firmed up from Monday's sell-off, with WTI crude reclaiming the key $40 handle. This limited USD-CAD gains through the remainder of the session.

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