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By XE Market Analysis August 14, 2014 2:27 pm
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    XE Market Analysis: Asia - Aug 14, 2014

    The dollar stumbled some early in the session, as higher U.S. jobless claims, and softer import prices took EUR-USD briefly over 1.34005, and USD-JPY to lows of 102.31. As risk levels improved however, the greenback perked back up, later resulting in the euro probing under 1.3365, and USD-JPY back over 102.50. Equities improved modestly, as yields stayed down on the back of a strong 30-year auction. Geopolitics remained largely on the back burner, though with Russia's "humanitarian" convey on the Ukraine's doorstep, ISIS running wild in Iraq, and a nervous Israel/Gaza ceasefire in place, markets will not likely get overly sanguine.

    [EUR, USD]
    EUR-USD traded briefly over 1.3400, touching 1.3404 highs before turning back under the figure. The move came on the back of softer U.S. data, and continued short covering in the aftermath of soft EU GDP data. Good offers were in place from 1.3400 to 1.3415, which marked Wednesday's peak. Germany's negative GDP print should keep the euro in sell-the-rally mode, and the trend low of 1.3333 remains on the market's radar screen. Indeed, the euro faded toward 1.3360 into the N.Y. close.

    [USD, JPY]
    USD-JPY edged up over 102.50, from session lows of 102.32, as Wall Street solidified modest gains, and as Treasury yields moved off session lows. Moves remain sluggish however, with solid bids from 102.20 countered by layered sellers from 102.60. Aside from a few points on either side, the 101.00 to 103.00 trading band has held up since May, and more of the same can be expected, likely until the fall, when markets will begin pricing in further BoJ stimulus.

    [GBP, USD]
    Cable capped out ahead of 1.6700 after drifting up from the 1.6680 area. Sterling had earlier briefly traded below the 200-day moving average at 1.6664 in logging a four-month low at 1.6657, before recovering amid a broader dollar down move. We still see potential for Cable to trade as low as 1.6500 in the period ahead, though with U.K. growth expected at 3%-plus this year (consensus is 3.0%, BoE view is 3.4%) we don't seen too much bearish potential beyond here. Key will be at what point in the ensuing recovery we start to see wages pick up, which the BoE said in its Inflation Report yesterday is the key metric being monitored with regard to the timing of a rate hike.

    [USD, CHF]
    EUR-CHF moved to five-month lows, touching 1.2111, and closing in on its March low of 1.2104. The combination of soft EU GDP, and Russian meddling has seen safe-haven flows into the CHF return. Traders will however, be reluctant to push the cross much below 1.2100, with SNB warning shots expected on a move under the figure. The Bank has assured markets it will defend its 1.2000 line in the sand.

    [USD, CAD]
    USD-CAD's foray under 1.0900 was brief overall, finding fresh support into the figure, after posting session highs of 1.0910. The pairing managed 1.0888 lows in London and matched that level after the North American open, though domestic corporate names were reportedly buyers from early in the session. Oil prices continued to slide, with WTI trading on the $95 handle, and providing some USD-CAD support. Gold was mostly flat, though the risk backdrop overall remained tentative. Initial resistance is seen at 1.0920, and we look for relatively steady CAD movements into Friday's re-release of Canadian July jobs data.

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