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By XE Market Analysis October 16, 2019 2:33 pm
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    XE Market Analysis: Asia - Oct 16, 2019

    The Dollar was lower on Wednesday in U.S. trade, leaving the DXY at one-month lows of 97.90, from opening highs of 98.39. Weaker U.S. retail sales dented USD sentiment, while a flat business inventory outcome put some downward pressure on Q3 GDP expectations. Treasury yields slipped lower, while Wall Street took a break from recent gains, leaving stocks moderately under water. EUR-USD rallied to 1.1085 from 1.1023 lows, while USD-JPY was range bound between 108.55 and 108.85. USD-CAD topped at 1.3231 following cooler Canada CPI, later falling to 1.3185. Cable printed new five-month highs of 1.2877, as Brexit hopes remain alive.

    [EUR, USD]
    EUR-USD peaked at near one-month highs of 1.1085, up from early lows of 1.1023 seen ahead of the softer U.S. retail sales data. Hopes for a Brexit resolution remain supportive of the pairing, while the market has not lost sight of the probability for a 25 basis point Fed rate cut at the end of the month. Should the rumored Brexit deal blow up between now and Thursday, however, EUR-USD looks set to trade back on the 1.09 handle in short order.

    [USD, JPY]
    USD-JPY topped at 108.84, up from post-retail sales lows of 108.56, and just under Tuesday's two-month highs of 108.90. Aside from reported progress on the U.S./China trade front, hopes for a Brexit resolution have kept risk-taking levels relatively elevated, which continues to weigh on the Yen. Japanese exporter offers are said to be in place from the 109.00 mark, while the 200-day moving average at 109.06 will be an important resistance level.

    [GBP, USD]
    Cable recovered from London lows of 1.2656, rallying to new five-month highs of 1.2877 into the London close. The Irish PM said that an extra summit may be needed because "many issues" need to be resolved. It's looking increasingly likely that a draft agreement won't be reached in time for tomorrow's EU summit, though hope remains things can be resolved. The UK government is obliged to ask for a three-month extension, as stipulated in the newly-minted Benn bill, in the event that a deal hasn't been reached by October 19.

    [USD, CHF]
    EUR-CHF moved above 1.1000 mark in N.Y. on Wednesday after rallying to two-month highs of 1.1039 on Friday from Tuesday's post-close low of 1.0870. An improvement in risk appetite again helped lift the cross, following a Bloomberg report saying a Brexit deal between the EU and the U.K. may be in the works by the EU summit on Thursday.

    [USD, CAD]
    USD-CAD popped to session highs of 1.3231 from under 1.3205 in the aftermath of the cooler headline Canada CPI data, though gains were capped by relatively steady oil prices. The pairing remains at the lower end of its monthly trading range, with the USD coming under broad pressure in light of progress on the U.S./China trade front, and the unwinding of safe-haven USD flows. USD-CAD support now comes at last Friday's 1.3171 low, with resistance at the 50-day moving average of 1.3262.

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