XE Market Analysis: Asia - Dec 04, 2019

The Dollar lost ground through the morning session in N.Y. on Wednesday, with declines
coming on the back of a weaker ADP employment survey, and a miss in the services ISM.
The USD later bounced some, as risk-on conditions prevailed. Wall Street and Treasury
yields were higher following a Bloomberg report that a phase-one U.S./China trade deal
may be in the cards before the imposition of additional tariffs, due December 15. EUR-
USD rallied to 1.1116 highs, later dropping back under 1.1070. USD-JPY headed to 108.95
from early lows of 108.55, while USD-CAD slipped to 1.3195 from near 1.3280, following
the BoC policy announcement. Cable printed nearly seven-month highs of 1.3120.

[EUR, USD]
EUR-USD topped at one-month highs of 1.1116, driven higher by weaker ADP jobs data,
and a softer than expected services ISM. The pairing has since pulled back under 1.1070,
leaving the Euro a little lower on the session. Profit taking from over the 1.11 mark was
noted, with traders wary of being long over the 1.1100 mark, which has provided solid
resistance for a month now. A close under the level could result in a period of consolidation
into the end of the week.

[USD, JPY]
USD-JPY got a boost from overnight two-week lows of 108.42, rallying to 108.89 into the
London close. The rally came as hope for a U.S./China trade deal ramped up again,
following yesterday's comments from Trump, who said he could wait until after the 2020
elections to make a trade deal. Bloomberg since reported that a phase one deal should be
completed before fresh tariffs are set to kick in on December 15. USD-JPY matched its
200-day moving average at 108.89, and a close above the level will be taken as a supportive
outcome on a technical basis.

[GBP, USD]
Cable settled off highs after rallying strongly, leaving fresh near seven-month highs. The
pairing topped at 1.3120. The high in Cable came ahead of the above-forecast final reading
in the UK's November services PMI, which didn't itself have much bearing on the pound,
apart from a brief bid in the immediate wake of the release. With just eight days to go until
the UK's general election, it's looking less likely that Labour will be able to close the
polling gap with the Conservative party. Politicos poll tracker is showing the Conservative
party with 43% support, and Labour with 33%, both unchanged over the last day.

[USD, CHF]
EUR-CHF fell to a two-week low under 1.0925 in N.Y., later bouncing to 1.0969 as risk
appetite returned following reports that the U.S. and China are near a phase one trade deal.
Broad risk-off conditions weighed on the cross on Tuesday, as trade concerns ramped up
yet again.

[USD, CAD]
USD-CAD fell to two-plus week lows of 1.3194 from near 1.3275 following the as-
expected BoC policy announcement of no change in rates. Firmer oil prices had seen the
pairing on a downward slope overnight, as U.S./China trade sentiment improved again (for
now). The 50-day moving average at 1.3218 has prompted some short covering since the
BoC, with USD-CA since moving back over 1.3240.