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By XE Market Analysis September 20, 2019 2:21 pm
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    XE Market Analysis: Asia - Sep 20, 2019

    FX trade was relatively quiet on Friday, with no data to drive prices, and a fairly neutral risk backdrop. This said, the Dollar managed modest gains through the session, taking the DXY from opening lows of 98.43 to a 98.63 high. Wall Street was narrowly mixed, while Treasury yields edged a bit lower. EUR-USD dipped to 1.0997 lows from 1.140 opening highs, while USD-JPY was stuck inside a 107.87 to 108.02 trading band. USD-CAD rallied early on soft-ish Canada retail sales, topping at 1.3300 before easing back into 1.3260. Cable meanwhile, pulled back to 1.2560 from London highs over 1.2580. Bigger picture, the Dollar can be expected to hold up going forward, with interest rate and and U.S. economic growth advantages continuing to support.

    [EUR, USD]
    EUR-USD fell to near lows of the week, basing at 1.0997 into the London close, after opening near 1.1040. Trade was quiet to end the week, though we expect the Euro to continue its slow grind lower in the weeks ahead. The outperforming U.S. economy, along with a sharp yield spread advantage can be expected to see the Dollar add to already lofty levels.

    [USD, JPY]
    USD-JPY rallied out of lows of the week at 107.77, topping in N.Y. 108.02, before easing back under 107.90. Range-trade has been in vogue this week, with the pairing confined to a 107.45 to 108.47 band since Monday. The combination of the Fed rate cut on Wednesday, and the lack of action from the BoJ on Thursday has effectively put a cap on the pairing, while relative calm on the geopolitical front, along with relatively risk-on conditions have limited USD-JPY downside.

    [GBP, USD]
    Cable headed lower into the N.Y. morning session, bottoming at 1.2460, on its way from London highs of 1.2582. EU's Juncker gave markets optimism that a Brexit deal could still be struck with the UK government in time for the October-31 deadline, lifted sterling on Thursday, only for Irish Foreign Minister Coveney to spoil the fun by saying that "there is still quite a wide gap between what the British government had been talking about in terms of the solutions they are proposing and what I think Ireland and the EU will be able to support." This doesn't bode well for UK PM Johnson as it is now understood that Brussels is aware of his draft proposals. The sticking point remains the Irish border, and the need for the UK to satisfy Irish and EU demands for "alternative arrangements".

    [USD, CHF]
    EUR-CHF fell from near 1.1015 to 1.0957 lows following the SNB announcement, where policy was left unchanged, and continued its downward track into Friday, basing at 1.0917. The lack of SNB action disappointed some, especially since the ECB eased last week.

    [USD, CAD]
    USD-CAD rallied to 1.3300 highs from 1.3270 following the tepid Canada retail sales outcome, after trading sideways overnight. WTI crude prices were on the move higher through the morning however, trading back over the $59.00 mark, which allowed USD-CAD to edge back into the 1.3260 region.

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