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By XE Market Analysis September 19, 2019 3:18 pm
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    XE Market Analysis: Asia - Sep 19, 2019

    The Dollar headed higher in N.Y. morning trade on Thursday, guided by decent incoming U.S. data. The DXY bottomed at 98.25 at the open, making its way to 98.42 after the London close. From there it was downhill, as GBP-USD and EUR-USD rallied following a report that EU commission president Junker said he thought a Brexit deal could be done by the end of October. Cable popped to 2-month highs over 1.2550 on the news, up from early lows near 1.2460. EUR-USD based at 1.1039, later making its way to 1.1062. USD-JPY topped at 108.08 after the U.S. data, though dipped to 107.84 as Wall Street gave back early gains. USD-CAD fell to 1.3242 lows after being unable to hold above the 200-day moving average.

    [EUR, USD]
    EUR-USD eased from 1.1073 highs to 1.1039 lows through the morning session, largely reacting to decent incoming U.S. data. The pairing reversed higher after the London close following reports that EU commission president Juncker said he though a Brexit deal could be made by the end of October. Cable rallied to two-month highs, while EUR-USD was dragged to 1.1062 from near 1.1045. The Euro had found some support ahead of that near the 20-day moving average at 1.1143. We continue to expect EUR-USD to remain in sell-the-rally mode, given growth and yield differentials, both in favor of the Dollar.

    [USD, JPY]
    USD-JPY was again range-bound through the session, sticking to a 107.90 to 108.08 trading band through the morning session. The BoJ left policy unchanged overnight, though called for a re-examination of prices and the economy at the October meeting, which suggests there could be further easing coming, if things turn for the worse. A higher Wall Street was supportive of the pairing through the morning, though as stocks pared gains, the Dollar again turned under the 108.00 level, bottoming at 107.84. Improved expectations for movement on the U.S./China trade war may limit USD-JPY downside for now. Support comes at Monday's 107.45 low, with resistance at 108.50.

    [GBP, USD]
    Cable printed a high at 1.2495 in early N.Y. trade, which capped a 57-pip rise from the low. The BoE noted that if Brexit uncertainty persists, inflationary pressures would likely become weaker, while noting that the outlook for global growth has weakened as a consequence of the U.S.-China trade war. This followed an as-expected decision to leave policy settings unchanged, and was enough to elicited some selling of pounds, concurrently with a dip in UK yields. Later, after the London close, GBP-USD rallied from 1.2490 to over 1.2550, a two-month high after EU commission president Juncker told Sky News he believes "we can have a deal" on Brexit by October 31. It remains to be seen, how Mr. Juncker plans to make a deal, since there has been no movement from the EU side in months. Cable had been languishing in the upper 1.24s through the N.Y. morning session.

    [USD, CHF]
    EUR-CHF fell from near 1.1015 to 1.0957 lows following the SNB announcement, where policy was left unchanged. This disappointed some, especially since the ECB eased last week. The cross later recovered to 1.0987. The SNB also said FX intervention was still a tool, which may have spooked some shorts, resulting in short covering.

    [USD, CAD]
    USD-CAD faded from overnight highs of 1.3307, falling to 1.3242 in afternoon North America. The modest move lower came despite softer oil prices through the morning session, and appeared to be more of a technical move than anything. The pairing failed to close above it 1.3305 200-day moving average on Wednesday, and a test of the level during Asian dealings overnight resulted in sellers returning. WTI crude is well of its post-attack highs, though remains sharply higher versus last week, which in the bigger picture remains supportive of the CAD. Friday brings Canada retail sales.

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