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By XE Market Analysis August 13, 2013 2:48 pm
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    XE Market Analysis: Asia - Aug 13, 2013

    The dollar firmed up in N.Y. trade on Tuesday, helped by a stronger ex-autos retail sales outcome, and tame import prices. Equities started out under water, though later recovered on Fed's Lockhart remarks, which seemed to be equivocating a bit more over a September taper, while Treasury yields ticked higher as well. EUR-USD opened near 1.3300, and posted lows under 1.3235 by late morning, before inching up over 1.3350. USD-JPY peaked over 98.30 after opening near 97.90. Cable was an outlier, and maintained its footing, as U.K. data remains supportive, and Gilt yields rise.

    [EUR, USD]
    EUR-USD fell from over 1.3290 to 1.3260 after the U.S. data releases, and continued to session lows under 1.3235 by late morning. Firmer Treasury yields likely weighed on the euro, as the market gets onboard for a September Fed taper. EUR-USD's inability to clear very strong resistance from 1.3400-20 has also left a bearish sloping patter on the daily chart since late last week.

    [USD, JPY]
    USD-JPY met another round of option supply around 98.20 as large 98.10 expiries cap ahead of the N.Y. cut. Just after the U.S. data an advisor to PM Abe called on the BoJ to ease policy to cushion the impact from the sales tax hike, suggesting that it buys more ETFs or stop paying interest on excess reserves. The sales tax hike has been a hot topic after Q2 GDP disappointed and June core machinery orders gave back part of the May upswing in data released overnight. After pulling briefly under 98.00 in mid-morning, USD-JPY posted highs over 98.30.

    [GBP, USD]
    EUR-GBP fell sharply on heavy stops as last week's 0.8579 lows gave way. This level traded last Wednesday over the BoE Inflation Report and the break lower will leave bias on levels from early July when the cross briefly moved under 0.8500. The fallout in EUR-GBP sent EUR-USD under 1.3240, while Cable hit spike highs of 1.5513. However, it quickly edged back to 1.5450-60 as prices settled down and EUR-GBP moved up off its 0.8535 lows.

    [USD, CHF]
    EUR-CHF triggered stops on the way up through 1.2375. The extended EUR-CHF gains came on further dollar strength over the U.S releases, which lifted USD-CHF through 0.9345. The upturn in USD-CHF has been heavily influenced by fund names, though has looked supportive as a run of firmer daily closes reinforced long position building. EUR-CHF also overcame good resistance between 1.2330 and 1.2350 today and may threaten early August highs just shy of 1.2400. .

    [USD, CAD]
    USD-CAD moved to session highs over 1.0340 after the U.S. data, though upside follow through was hampered by standing offers from 1.0345 to 1.0360. Softer oil and gold prices weighed slightly on the CAD in morning trade, though improved risk taking levels later, removed some USD-CAD support. Further gains will be in the cards on a break over 1.0365, where buy stops are noted.

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