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By XE Market Analysis June 6, 2017 7:34 am
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    XE Market Analysis: North America - Jun 06, 2017

    The dollar continued on a softer tack against most currencies, which saw the USD tip to a new seven-month low at 96.49. USD-JPY was the biggest mover, losing nearly 1% in making six-week lows under 109.50. The buck also posted a on week low versus the Canadian dollar, a 12-day nadir against the Australian dollar, and a three-week low relative to the New Zealand dollar. EUR-USD was an exception to the dollar softening theme, as the pair ebbed moderately lower, under 1.1250, with the euro itself trading generally weaker, despite more encouraging data out of the Eurozone today. Cable saw a 12-day high at 1.2950 before turning tail and ebbing back to the 1.2900 area, with the market taking a circumspect view of the pound into the election on Thursday.

    [EUR, USD]
    EUR-USD softness has been notable today as it came dispute above-forecast May retail sales data out of the Eurozone, and a decade high in an measure of Eurozone investor sentiment. The pair was trading at 1.1247 bid, as of the early European PM session, down from the intraday high at 1.1277, with the euro remaining below the seven-month peak at 1.1285 it posted on Friday in the wake of the U.S. jobs report, data that has pointed to a shallower Fed tightening trajectory. Given the softer dollar backdrop, the fact that the market isn't responding to bullish euro cues suggests that the up trend is tiring, or at least that bulls are wanting better levels to buy. The euro's performance has also been flagging against other currencies, with EUR-JPY trading near three-week lows, and EUR-GBP having come off the boil after logging a three-month high yesterday. In the bigger view, EUR-USD had bee in a bullish phase since early April, though we have been highlighting that momentum indicators have been coming off over the last couple of weeks, despite new higher highs, suggesting risk of a corrective phase. EUR-USD resistance is at 1.1285 and 1.1299-1.1300, and support is at 1.1216-20.

    [USD, JPY]
    USD-JPY lost nearly 1% in making six-week lows under 109.50, extending losses seen in the Tokyo session. This is the third consecutive session the pairing has declined, continuing a downtrend that's been in place since a six-month peak was logged at 115.50 on May 10. Dollar weakness is one part of the explanation, while risk aversion in global markets has also been keeping the Japanese currency in outperformance, in accordance with the usual correlative pattern. Japanese data today showed wage growth returning in Japan, too. We advise following USD-JPY's trend for now. USD-JPY has trend support at 109.17-20, and resistance at 110.31-33.

    [GBP, USD]
    Cable posted a fresh 12-day high at 1.2950 before tilting back to around the 1.2900 level. While the pound was bid after the of the latest poll from ICM yesterday, which put support for the Conservative Party at 45% versus 34% for Labour, the election on Thursday still presents not insignificant political risk for markets. UK data have also mostly been sub-par, including a big miss in the May services PMI reading. Britain goes to the polls on Thursday. We think Cable's bias will be downward into the election itself, with risk of a rebound above 1.3000 in the event that the Conservative's return to power after the election with an increased majority.

    [USD, CHF]
    EUR-CHF has drifted to four-week lows in the mid 1.08s, despite SNB governor Jordan's "franc is too strong" rhetoric last week, and a set of soft Swiss data., including a 0.3% q/q Q1 GDP growth figure, which undershot the median forecast for 0.5% growth and compares to 0.7% growth in the same quarter in the U.S. and 0.5% growth in the Eurozone. EUR-CHF still remains well up on the sub-1.07 levels that were prevailing in April before the French presidential elections, and we expect this to remain the case unless the euro comes under heavy pressure.

    [USD, CAD]
    USD-CAD has ebbed to an eight-day low of 1.3442. A generally weak U.S. dollar has been driving the move, offsetting the 3%-plus decline crude prices saw yesterday (a magnitude of movement that would often impact the Canadian dollar). USD-CAD's late May low at 1.3387 provides a downside reference marker. Resistance is at 1.3476-78.

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