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By XE Market Analysis April 8, 2015 4:28 pm
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    XE Market Analysis: Asia - Apr 08, 2015

    The dollar made its way modestly higher through the morning session, before making a final push higher after the FOMC minutes. The minutes were a mixed bag, showing a division on the timing of rate liftoff, not surprisingly. The minutes showed several Committee members wanting a June hike, others later in the year, and a couple thought the economic outlook wouldn't call for a tightening until 2016. Overall however, the FX market took the minutes as slightly hawkish leaning, reminding that a rate hike will indeed come at some point, even as the ECB continues to ease, and the BoJ leans toward further easing measures. EUR-USD based at 1.0754, falling from highs of 1.0878 early in the session, as USD-JPY touched 120.31, from a low of 119.65. Cable outperformed overall, holding the 1.4850 level, while USD-CAD traded over 1.2550, as oil prices fell sharply.

    [EUR, USD]
    EUR-USD traded the 1.07 handle for the first time since last Thursday during the morning session, touching 1.0784 lows after tripping reported sell stops at 1.0800. The Fed's Dudley kept the door open for a June rate hike in earlier comments, which appeared to have set market thinking to maybe sooner than September for rate lift-off. The pairing recovered into the FOMC minutes, before falling into 1.0766 from near 1.0820. Support is seen into 1.0750, the April 2 low.

    [USD, JPY]
    The dollar firmed moderately after the FOMC minutes, which didn't clear up the outlook much, as hawks and doves largely canceled each other out. USD-JPY nonetheless, rallied to 120.31 highs, up from near 119.85 ahead of the release. Resistance now comes in at 120.45, representing Tuesday's peak. The N.Y. close over the 20-day moving average of 1.19.88 could be taken as a bullish sign going forward.

    [GBP, USD]
    Sterling traded lower in N.Y. on Wednesday, following the dollar's move higher. Cable opened near 1.4970, and methodically made its way to 1.4850 lows after the FOMC minutes. Generally, the pairing remains inside a broad 1.4750 to 1.5000 trading band, with more of the same expected in the coming days.

    [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 peaked at 1.2548 in morning trade, up better than 100 points from opening levels. The greenback's general resurgence allowed the pairing to rise, while the sell-off in oil prices supported as well. WTI crude slid over 6% on the session, touching $50.36 lows after the large EIA reported crude inventory build. USD-CAD touched six-week lows of 1.2388 overnight, before this morning's rally, levels that have provided solid support since the beginning of February.

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