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By XE Market Analysis October 25, 2019 2:46 pm
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    XE Market Analysis: Asia - Oct 25, 2019

    FX Trade was quiet in N.Y. on Friday, though the Dollar rose overall. The DXY moved to seven-session highs of 97.90, posting the bulk of gains at the expense of the Euro and Pound. A slight University of Michigan consumer sentiment miss had little impact on trade. EUR-USD dipped to 1.1073 from early highs of 1.1105, as USD-JPY headed to 108.77 from 108.51. USD-CAD was rangebound between 1.3057 and 1.3074. GBP-USD meanwhile dropped to 1.2805 lows. Next week will be busy, and besides a likely Fed rate cut, traders will deal with consumer confidence, the ADP jobs report, advance Q3 GDP, manufacturing ISM, and of course, the October employment report.

    [EUR, USD]
    EUR-USD printed lows of the week after the London close on Friday, bottoming at 1.1073. Thursday's ECB announcement and press conference were surprise-free, though with the QE program set to be fired up again, and the Bank saying the "Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge", this was enough to see some long Euro positions squared up, and the initiation of fresh shorts put on the books.

    [USD, JPY]
    USD-JPY rallied modestly to highs of the week at 108.77, up from opening lows of 108.51. Friday's Wall Street rally, which was driven by reports that the U.S. and China had come close to agreeing on some parts of a trade agreement, along with slightly higher Treasury yields, provided support. The 109.00 level remains key resistance, followed by the 200-day moving average at 109.06.

    [GBP, USD]
    Cable dipped to 1.2805 from overnight highs of 1.2862. On Brexit, several things are clear: 1, there is now no chance of a no-deal Brexit on October 31: 2, Johnson is set to table a motion calling for a December-12 election on Monday. 3, the EU will decide on on the length of Brexit extension, mostly subject to what happens at Monday's parliamentary vote on Johnson's election motion. What's unclear is how the stand-off between Johnson and the opposition will unfold should the opposition refuse a general election. By threatening to pull the Brexit deal, Johnson is essentially threatening a so-called zombie parliament, tantamount to a government shutdown, though what Johnson is really doing is forcing the opposition to bring his government down in a confidence motion, which would initiate a general election.

    [USD, CHF]
    EUR-CHF topped at six-session highs of 1.1042 in N.Y. on Thursday, steadying above 1.1000 through Friday's session. The worst case for Brexit appears to be behind us now, though uncertainty of an election call may keep jitters going for now. . Odds for a crash-out no- deal have fallen sharply sine the start of the week, adding some weight to the risk-sensitive CHF.

    [USD, CAD]
    USD-CAD remained above the three-month low of 1.3053 seen on Wednesday, ranging between 1.3057 and 1.3074 through the North American session. WTI crude prices hit October highs of $56.55 earlier, while positive U.S./China trade news, along with general risk-on conditions, have limited USD-CAD upside. 2019 lows of 1.3016, seen in July remain in sight.

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