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By XE Market Analysis October 18, 2018 2:55 pm
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    XE Market Analysis: Asia - Oct 18, 2018

    The dollar index rallied to eight-session highs of 95.97 in N.Y. on Thursday, with gains coming on safe-haven flows into the Greenback. It was another risk-off session, with threats of Fed rate hikes, coupling with the Saudi situation, and ongoing European concerns over Italy. EUR-USD slid to 1.1455 lows after topping at 1.1516. The risk-sensitive USD-JPY bucked the trend, falling to 111.95 as Wall Street melted down. USD-CAD topped at 1.3088 as oil prices printed trend lows. Cable remained under pressure, bottoming at 1.3020, with no light seen at the end of the Brexit tunnel.

    [EUR, USD]
    EUR-USD fell to eight-session lows of 1.1455, as the dollar (and Yen) see safe-haven inflows amid the risk-off backdrop. Euro weakness has been a factor as well, as Italy continues to weigh. The fiscal plan of the new Eurosceptic coalition government in Italy remains at issue, with both ECB and EU officials continuing to warn that rising debt won't solve Italy's problems and with the EU Commission on a course to reject Italy's projections. Eur-USD October 9 low of 1.1430 is the next support level.

    [USD, JPY]
    USD-JPY fell from earlier highs of 112.62, bottoming at 111.95 in concert with Wall Street's slide. The risk-backdrop continues to influence the pairing, though it remains about in the middle of its one-week trading range. The 50-day moving average at 111.94 provides the next support level.

    [GBP, USD]
    Cable fell to two-week lows of 1.3020, down from earlier highs at 1.3131. Market participants are taking a sanguine view of the risk of a no-deal Brexit, although the risk of a cliff-edge departure seems more tangible after the EU-27 cancelled the special summit for Brexit that had been earmarked for mid November. We continue to expect that the UK's parliament will ultimately stop a no-deal scenario from happening (which might in the end take a new referendum or a general election), while the EU's offer of an extended transition period, which will be granted once a deal is struck, has helped allay concerns after this week's Brussels summit, once heralded as a make-or-break threshold, came and went with little fanfare.

    [USD, CHF]
    EUR-CHF pulled back to 1.1401 lows in N.Y. on Thursday, as the Euro came under pressure. The losses came in concert with another sell-off in Italian markets.

    [USD, CAD]
    USD-JPY fell from earlier highs of 112.62, bottoming at 111.95 in concert with Wall Street's slide. The risk-backdrop continues to influence the pairing, though it remains about in the middle of its one-week trading range. The 50-day moving average at 111.94 provides the next support level.

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