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By XE Market Analysis April 2, 2015 2:50 pm
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    XE Market Analysis: Asia - Apr 02, 2015

    The dollar was mostly lower in N.Y. trade on Thursday, despite better initial jobless claims, a much narrower trade deficit, and improved factory orders. Pre-Easter weekend book adjusting was ultimately the main driver, which resulted in European accounts being buyers of EUR-USD and cable. USD-CAD moved lower on a narrower Canadian trade deficit, while USD-JPY edged slightly higher on firmer yields, and a modestly better Wall Street. Trade will be quiet in Asian hours overnight, as eyes turn to Friday's U.S. employment report. Canada and most of Europe will be on holiday, so the condensed U.S. session could be interesting, at least briefly, with liquidity likely to be at a premium.

    [EUR, USD]
    EUR-USD rallied to session highs at mid-morning, moving up to 1.0905, as European driven short covering continued into the long Easter weekend. Fund backed sellers were reported over the figure, resulting in a move back under 1.0890, though the pairing remained underpinned into the London close, and indeed through the afternoon session. Ahead of Friday's U.S. trade report, some euro shorts were covered, likely as price action could be very choppy on Friday, with much of Europe, as well as Canada on holiday.

    [USD, JPY]
    USD-JPY bounced to session highs of 119.89 immeditately following the better US. trade and jobless claims data, helped by higher U.S. yields, and higher equities. The pairing quickly fell back to 119.61 before stabilizing, and trading near 119.70 into the close.

    [GBP, USD]
    Sterling has traded lower on the construction PMI, which came in much weaker than expected at the headline level, dipping to 57.8 from 60.1, although was offset by a rise in optimism to a nine-year peak, while there were also signs that activity may pick up once the May-7 election is out of the way. Cable logged an intraday low at 1.4777 in early N.Y. trade, before following EUR-USD higher. Cable peaked later just over 1.4860.

    [USD, CHF]
    EUR-CHF has established a lower trading range under 1.0500, posting levels last seen in January of 103.90 on Thursday. There have been some analyst notes in circulation highlighting further policy options the SNB has available to try and keep a lid on the franc (including cutting rates deeper into negative territory). The SNB said at its March policy review that the franc is "significantly overvalued and should continue to weaken over time," and that, in a shot across the bows of the market, said it will continue to take account of the franc rate situation in policy decisions and "remain active in the foreign exchange market, as necessary."

    [USD, CAD]
    USD-CAD rallied briefly on the mix of data, where the narrower U.S. trade deficit and lower jobless claims trumped the better than expected Canadian trade gap. The pairing moved from 1.2630 to over 1.2655, before falling back into 1.2600 initially, and later to session lows of 1.2555. Domestic name selling was reportedly the major driver, with positions pared ahead of Good Friday holiday. USD-CAD stayed down, despite oil price losses.

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