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By XE Market Analysis September 12, 2019 2:38 pm
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    XE Market Analysis: Asia - Sep 12, 2019

    The dollar rallied early in N.Y. on Thursday on the back of a warmer core U.S. CPI outcome, and on an ECB announcement which included a 10 basis point rate cut, and an open-ended reinstatement of QE. This saw EUR-USD fall to within a hair of the two-plus year lows of 1.0926 seen in early September. USD-JPY rallied to 108.11 highs as risk-on conditions remained in place, as Wall Street approached all time highs. USD-CAD traded between 1.3177 to 1.3217, closing near its high, as oil prices remained under pressure. Cable bottomed at 1.2283, later rallying back to 1.2340, and so far holding above its 50-day moving average at 1.2277 through the week.

    [EUR, USD]
    EUR-USD initially rallied to 1.1067 from near 1.1020 following the as-expected ECB rate cut of 10 basis points. The pairing quickly reversed to eight session lows of 1.0927 on the realization that QE will be restarted in November. EGB yields initially turned sharply lower. EUR-USD later headed back above pre-ECB announcement levels, topping at 1.1087, as EGB yields unwound all their earlier losses, supporting the EUR, while expectations for aggressive Fed easing have waned, though a 25 basis point cut at next week's FOMC meeting is fully priced in. EUR-USD support remains at 1.0926, the September 3 two-plus year low, with resistance at the August 29 peak of 1.1093.

    [USD, JPY]
    USD-JPY rallied to fresh one-month highs of 108.16 during the overnight Asian session, later falling into 107.52 lows in early U.S. dealings. Apparent concessions on the trade front by both the U.S. and China, along with accompanying risk-on conditions, have seen the pairing bounce back over the 108.00 level into the London close. The usual talk of Japanese exporter offers over the 108 mark have been heard, though appear to have been filled by now. Renewed optimism on trade progress, should continue to underpin USD-JPY.

    [GBP, USD]
    Cable dipped early on the back of warmer U.S. CPI data, falling to 1.2283 low, and down from opening highs near 1.2340.The pound continues to trade without domestically-driven direction, which has been the case since Parliament closed on Tuesday. On the Brexit front, things remain relatively quiet, with parliament remaining shut, and no new ideas as to how the process plays out. The October 31 Brexit deadline is quickly approaching.

    [USD, CHF]
    EUR-CHF fell from near 1.0950 to 108.52 lows following the ECB announcement, which resulted in a rate cut and the re-implementation of QE. The cross was dragged lower by EUR-USD, which fell to near two-plus year lows. As EUR-USD later recovered, so too did EUR-CHF, peaking at 1.0965.

    [USD, CAD]
    USD-CAD posted one-week highs of 1.3218 in early North American trade, up from Asian lows of 1.3177. Another downdraft in WTI crude prices, plus warmer U.S. CPI kept buyers in charge for a while. The pairing turned choppy later in the session, traversing a 1.3177 to 1.3217 trading band, though was set to close above the 50-day moving average at 1.3198. The September 6 top of 1.3244 the next resistance level.

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