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By XE Market Analysis September 6, 2019 2:29 pm
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    XE Market Analysis: Asia - Sep 06, 2019

    The Dollar ended the Friday N.Y. session about where it started, falling initially on a softer non-farm payroll outcome, though later moving higher as the better internal components of the jobs report offset to a degree. Earnings and participation rate were stronger than forecasts. EUR-USD rallied at 1.1020 to over 1.1055 after the data. USD-JPY fell from 106.95 to under 106.65, while USD-CAD fell to one-month lows under 1.3160 on a better Canada jobs report. Cable steadied on either side of 1.2300. Later, the USD headed a bit higher following Powell's comments from Zurich, taking EUR-USD from near 1.1050 to 1.1026 lows, and USD-JPY to 106.92 from 106.75. Powell did not sound particularly dovish, saying he did not expect a recession, ans sees the consumer continuing to drive moderate U.S. growth. All in all, no indication the Fed will be aggressive in its policy shifts going forward.

    [EUR, USD]
    EUR-USD bounced modestly from 1.1025 to 1.1050 following the softer headline U.S. non-farm payroll outcome, though better internal components limited gains, later seeing the pairing fall from highs back under 1.1030 on Powell comments from Zurich. Powell said the Fed was keeping an eye on downside risk, but the consumer should continue to drive growth. A relatively softer EU economy can be expected to contain EUR-USD upside going forward, especially as the ECB is set to ease in September.

    [USD, JPY]
    USD-JPY recovered from its initial post-jobs report dip to 106.70, with the rebound coming as the report overall was better than the non-farm payrolls miss indicated. Firmer earnings, and a higher participation rate were positives. Treasury yields have remained firm, while equity futures continued in the green, both supportive of USD-JPY. The overnight high of 107.10 is the next upside target. The pairing later bounced from near 106.75 to over 107.90 on Powell remarks, who sounded less than dovish.

    [GBP, USD]
    The Pound steadied on Friday after rallying by over 3% against the dollar from the major trend lows that were seen on Tuesday. The end of a big political week in the UK has seen Prime Minister Johnson lose three major parliamentary votes and lose authority. One of his Tory party members defected to a pro-EU party, which removed the government's wafer thin one-seat majority, while 21 Tory rebels who voted against the government were expelled from the party. This means there will be an election, the only question remaining is when. The developments seen over the past week should keep the pound for now underpinned, though the spectre of a no-deal Brexit hasn't disappeared as Johnson and his Tory party could still of course win in an election.

    [USD, CHF]
    EUR-CHF has now rallied for three straight days, printing a one-month peak at 1.0931, extending the rebound from the 26-month low seen on Tuesday at 1.0811. The pickup in risk appetite in global markets, and reduced risk for a no-deal Brexit, has taken the pressure off the ECB as it heads into next Thursday's government council meeting. This has helped float the euro and at the same time see an unwinding in the franc's safe haven premium (such as it is given the punishing -0.75% deposit rate in Switzerland).

    [USD, CAD]
    USD-CAD fell to one-plus month lows under 1.3160 through the morning session, down from 1.3230 after the much stronger Canada employment report. The pairing traded decisively below its 50-day moving average at 1.3190, which for now should revert to a resistance level. Oil prices remained firmer this week, keeping a cap on USD-CAD, as have the risk-on conditions seen over the past couple of session. Interim support is a 1.3150, then 1.3100.

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