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By XE Market Analysis October 16, 2017 3:03 pm
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    XE Market Analysis: Asia - Oct 16, 2017

    The FX market was relatively quiet in N.Y. trade on Monday, with major dollar pairings largely sticking to narrow trading ranges. The greenback moved to session highs following a joint press conference between Trump and Senate leader McConnell, where the two appeared to be on the same page with regards to tax reform. This helped stocks and the dollar. EUR-USD dipped to session lows of 1.1794 into the close, after topping at 1.1819 into the London close. USD-JPY perked up to 112.20 highs from a base of 111.67, while cable fell to 1.3225 lows, adding to losses incurred after reports said the U.K. was headed for "Brexit breakdown". USD-CAD maintained altitude over 1.2500.

    [EUR, USD]
    EUR-USD has been range bound through the session, opening at session lows of 1.1796, and topping at 1.1819 into the London close. The euro is on its second session of lower daily highs and lows, unwinding some of last week's gains, and keeping the pairing without much of a directional bias. We look for range trade to kick in for the time being.

    [USD, JPY]
    USD-JPY was steady through the morning session, opening at highs of 111.88 before basing at 111.66, then settling near 111.75. The 200-day moving average, currently at 111.79 appears to be the fulcrum, and a close below the level could shift the technical picture to a more bearish outlook. The last time the pairing closed under its 200-day MA was September 25. USD-JPY later poked its head above the 112 mark, topping at 112.05, before being quickly sent back down to 111.85. Hopes for U.S. tax reform may have helped the pairing higher, as Trump and McConnell sounded as though they were on the same team. Japanese offers emerged over the figure however, putting a quick end to the rally.

    [GBP, USD]
    Cable took a dive following Bloomberg reports that the U.K. sees a "Brexit breakdown" if the EU does not compromise in negotiations. The report said negotiations will fall apart unless the EU shows signs it is willing to allow trade talk to move forward. Cable fell to 1.3247 from near 1.3300, before recovering to 1.3270. Later, as the dollar recovered on positive U.S. tax reform news, cable dropped to 1.3225 lows.

    [USD, CHF]
    EUR-CHF has ebbed back under 1.1500 after last week capping out a near two-week rally phase at 1.1566, which was the loftiest level seen since September 25. An abatement in the standoff between Catalan would-be secessionists with Madrid as a worry-point for markets had elicited franc selling, which since July has been tending to trade softer on any signs that suggests risks to the political integrity of the Eurozone are abating. We have been anticipating an eventual return to 1.2000, which is the former trading floor of the SNB's.

    [USD, CAD]
    USD-CAD touched six-session highs of 1.2558,coming from overnight lows of 1.2470. The run up in WTI crude prices provided little loonie support, as USD-CAD buyers emerged ahead of the 50-day moving average of 1.2455. With oil back under $52 again, the pairing has maintained altitude above 1.2500. The BoC outlook survey also put a floor under USD-CAD, revealing further evidence that another rate hike is not likely in the cards at next week's BoC policy meeting.

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