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By XE Market Analysis September 6, 2018 3:04 pm
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    XE Market Analysis: Asia - Sep 06, 2018

    The Dollar index moved higher in N.Y. morning trade on Thursday, topping at 95.21, and up from opening lows of 94.94. Risk-off conditions along with U.S. political nervousness kept safe-haven flows alive. EUR-USD fell to 1.1606 from 1.1654 highs, while the risk sensitive USD-JPY bucked the trend, falling to 110.71 lows. Cable topped at 1.2961 before settling near 1.2930, while USD-CAD rallied from 1.3171 to 1.3226 as oil prices sold off sharply.

    [EUR, USD]
    EUR-USD peaked at 1.1654 after the early round of U.S. data, later falling to 1.1606 lows into the London close. The softer ADP and factory data provided some support to the pairing, though safe-haven dollar flows picked up as Wall Street, led by techs, fell sharply, ans a U.S. political jitters continued.

    [USD, JPY]
    USD-JPY printed five-session lows of 110.71, taking its cue from the latest downdraft on Wall Street, which has seen the NASDAQ dive over 1%, and lower Treasury yields. U.S. political jitters remain in place following the anonymous NY Times op-ed. USD-JPY support comes at 110.68, which is the August 31 low.

    [GBP, USD]
    Cable has settled around 1.2930 after earlier posting a high of 1.2061. There is a Goldman Sachs note in circulation that is ascribing a 30% risk for the UK to exit the EU without a new trading deal, a scenario that it thinks would lead Cable to 1.1500 and EUR-GBP to parity, which we wouldn't contest. If the UK agrees a status-quo transitory agreement, to buy time to negotiate a bilateral trade agreement, which is what we expect, GS would anticipate the Pound to rise by 5%, a view which again we wouldn't contest.

    [USD, CHF]
    EUR-CHF fell to 13-month lows of 1.1229 after a three-day upturn stalled at 1.1320 yesterday. A stronger than expected Q2 GDP outcome out of Switzerland, which rose 0.7% q/q with Q1 growth upwardly revised to 1.0% y/y from the 0.6% y/y pace previously reported, gave the franc a lift, with the data inviting market narratives questioning the need for the SNB's ultra accommodative policy. The cross still remains above Monday's 14-month low at 1.1240. An abatement in concerns about the Italian government's budget plans and a steadying in the Turkish lira has seen the franc unwind some of its recently rekindle safe haven premium (which it evidently still has despite the -0.75% deposit rate).

    [USD, CAD]
    USD-CAD posted session highs of 1.3226 after the weak Canada building permits outcome, and a plunge in WTI crude prices. after ranging between 1.3200 and 1.3166 overnight. Lower GoC yields after the data have supported, though WTI crude prices have firmed up, limiting CAD losses. Focus remains on U.S./Canada trade negotiations, which reportedly ran into the night on Wednesday. Canada foreign minister Freeland remained optimistic in interviews yesterday.

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