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By XE Market Analysis September 27, 2019 4:33 pm
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    XE Market Analysis: Asia - Sep 27, 2019

    The Dollar eased some overall in N.Y. trade on Friday, taking the DXY from near one-month overnight highs of 99.31 to U.S. lows of 98.99. FX trade was choppy through the morning, though the USD was little impacted by incoming U.S. data, which overall, was decent. The White House shook up markets when it was reported that the U.S. is considering limiting portfolio flows into China, and de-listing Chinese companies from U.S. stock exchanges. This saw the Dollar pull back, stocks slide, and Treasury yields head lower. EUR-USD ranged between 1.0927 and 1.0958, settling near 1.0945. USD-JPY peaked at 108.18, then fell back to 107.79 after the China news. USD-CAD fell to 1.3214, though bucked the trend to a degree, later rallying to 1.3265. Cable meanwhile, tried to recover from overnight low, ultimately peaking at 1.2330 before falling back to 1.2288. Looking ahead, the Greenback is likely to remain choppy overall amid a backdrop of political upheaval in the U.S., geopolitical uncertainties, and a U.S./China trade war, with no end in sight.

    [EUR, USD]
    EUR-USD was range bound in N.Y. trade on Friday, after touching fresh 28-month lows of 1.0905 during overnight Asian hours. The pairing remained between 1.0927 and 1.0958 through the day, peaking into the London close on general pre-weekend Euro short-covering. Weak incoming European data and a dovish ECB continues to take a toll on EUR-USD, and we look for further downside in the coming weeks. A break below the 1.09 level is expected to bring a fresh wave of selling to bear. The early May, 2017 low if 1.0840 is the next downside target once the 1.09 level gives way.

    [USD, JPY]
    USD-JPY topped at seven-session high of 108.18 at mid-morning, later falling back to 107.79 following reports that the White House is considering limits on U.S. portfolio flows into China. Being discussed are delisting Chinese companies from U.S. stock exchanges, and limiting U.S. citizens' exposure to Chinese markets via government pension funds. The news saw equities from from decent gains to decent losses, which weighed down USD-JPY. Stocks have stayed down, limiting the Dollar's bounce to just 107.93.

    [GBP, USD]
    Cable took a dive in London morning trade after dovish BoE-speak with MPC member Saunders, who by reputation and track record is by no means a dove, said that a rate cut is now "quite plausible"-- and even in the event that the UK avoids s no-deal Brexit scenario. This marks a shift in BoE guidance which has up until now remain committed to gradual tightening over the policy horizon on the proviso that the Brexit process is smooth and orderly. Sterling fell to 1.2270 versus the Dollar, from 1.2336 highs. The BoE had already noted the detrimental effects of dragging-on Brexit uncertainty at its policy meeting earlier in the month, along with more challenging global economic conditions. Cable dove to an 18-day low at 1.2277, extending the correction from the two-and-a-half-month high seen last Friday at 1.2582.

    [USD, CHF]
    EUR-CHF has find a toehold after five consecutive days of decline, which culminated in a three-week high being printed on Wednesday at 1.0832. The declines over the last week follow the SNB's quarterly policy announcement last week, which will be frustrating to Swiss policymakers given their chronic concerns of the franc's chronic state of overvaluation (which regularly tops the Economist magazine's Big Mac purchasing parity comparison of currencies). The 26-month seen in early September at 1.0811 has so far remained untroubled, but still looks vulnerable.

    [USD, CAD]
    USD-CAD reportedly succumbed to stop-loss selling pressures on the move under the 50-day moving average at 1.3240. Pre-weekend position squaring was a likely factor as well. The pairing bottomed at two-week lows of 1.3214 before recovering back toward 1.3265. The bounce came as WTI oil prices shed over $1/bbl from earlier highs of $56.76. Without a decisive break under 1.32 or over 1.33, more range trade can be expected for USD-CAD. Canada's economic calendar picks up next week with August IPPI, July GDP, and the August trade report.

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