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By XE Market Analysis September 30, 2019 2:37 pm
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    XE Market Analysis: Asia - Sep 30, 2019

    The Dollar was firmer in N.Y. on Monday, taking the DXY to 28-month highs of 99.45 early in the session. Much of the Dollar index's move came with EUR-USD weakness, which saw that pairing fall to trend lows of 1.0885 on the back of cool German CPI. Later, softer U.S. Chicago PMI and Dallas Fed index outcomes prompted some USD position squaring. Treasury yields were steady into quarter-end, while Wall Street managed decent gains, despite U.S. political uncertainty, led by the NASDAQ. Elsewhere, USD-JPY traded over 108.15 on better risk taking levels, while USD-CAD was range bound, remaining inside of Friday's trading band. Cable posted gains in morning trade, topping at 1.2346, later falling to 1.2278 after the London close.

    [EUR, USD]
    EUR-USD took another leg lower, trading under the 1.09 mark for the first time since the second week of May, 2017. There appeared to be a push to run sell-stops located just under the 1.0900 mark, following cooler German CPI, resulting in a dip to lows of 1.0885. Reports of 1.0900 option expiries on Tuesday and Wednesday may now keep the pairing glued to either side of the level until then. Eventually though, we see further Euro downside, as European growth continues to fade, the ECB remains uber-dovish, and the Dollar continues to find support on the back of USD friendly interest rate spreads. The Euro later bounced on short covering interest, though managed a high of just 1.0914.

    [USD, JPY]
    USD-JPY held up fairly well through the session, printing intra day highs of 108.15 after the London close. Moderately risk-on conditions supported on Monday, along with a slight uptick in Treasury yields. Relative calm on the U.S./China trade front has weighed some on the Yen as well, as high-level talks are expected in Washington on October 10-11. China's Vice Premier Liu He, along with the USTR Robert Lighthizer and Treasury Secretary Steven Mnuchin are expected to run the negotiation sessions. Above Friday's 108.18 highs, the September 19 top at 108.47 is USD-JPY's next upside target.

    [GBP, USD]
    Cable printed a high at 1.2345 in N.Y. trade, later falling back to 1.2278 after the London close. Brexit remains front and centre. Opposition parties, led by Scotland's SNP, are looking to stage a confidence motion as soon as this week to take down Boris Johnson's government, concerned that he might on a technicality disregard the new law preventing a no-deal Brexit on October 31 in the event that a deal has been achieved. This hasn't until now been looking a viable option given that the opposition have been divided about who would lead an interim government, with leader of the opposition, Labour's Corbyn, unpopular. In the event this happens, a delay in Brexit to January 31 would be all but assured, with a general election likely in late November.

    [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 1.0885. 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 eased back from early highs of 1.3260, which coincided with WTI crude printing session lows under $55.00. The pairing has since dipped toward 1.3235 on the back of oil's rally back over $55.50, and softer U.S. Chicago PMI outcome. USD-CAD remains inside of Friday's trading band, continuing to trade on either side of its 20- and 50-day moving averages, at 1.3239, and 1.3243, respectively. Upcoming Canada data includes July GDP on Tuesday, and August trade on Friday.

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