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By XE Market Analysis August 19, 2013 2:21 pm
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    XE Market Analysis: Asia - Aug 19, 2013

    FX trade was extremely quiet in N.Y. on Monday, with no data, and largely flat equity markets keeping direction plays to a minimum. Treasury yields firmed up a bit, perhaps keeping the greenback's downside in check in afternoon trade. USD-JPY however, did pull back modestly in late dealings, after failing to hold the 98.00 handle, That pairing eased back toward 97.70 into the close. EUR-USD was in a narrow band on either side of 1.3350. We look for the dollar to remain fairly steady into the FOMC minutes, and the KC Fed conference in Jackson Hole. The U.S. calendar is empty again on Tuesday.

    [EUR, USD]
    EUR-USD was content to hover in a very narrow range in N.Y. trade, managing just a 1.3338 to 1.3361 band. Activity was reportedly limited to intra day interest, with very few sizable flows noted. Despite hawkish rhetoric overnight, the euro never re-tested London highs. The EUR rose initially as Bundesbank comments on a 'rate hike option' if inflation risks emerged, cast doubt over the ECB's communication strategy to date.

    [USD, JPY]
    USD-JPY rose on a positive chart pattern, option strikes and JPY cross demand, into the N.Y. open, and managed to trade briefly above 98.00. With few willing to put large positions on however, profit taking ensued after the London close, taking the pairing under 97.70 from highs of 98.12. Short term sentiment is still skewed to selling pressure on upticks following last week's break to 97.05. However, the recent rise in U.S. yields, rather than helping USD-JPY, has weighed as it forced investors to cut exposure to stocks.

    [GBP, USD]
    EUR-GBP turned away from trend lows to trade back over 0.8530. Fund demand for Cable forced EUR-GBP below 0.8515, leaving it just short of last Thursday's six week lows at 0.8505. European corporate bids put a floor in place, along with outstanding options from 0.8500 to 0.8470. The cross move gave Cable longs a buying opportunity as it backed off from 1.5675 to 1.5635.

    [USD, CHF]
    EUR-CHF pulled back following the correction from over 1.2400 late last week on USD-CHF weakness. Two consecutive failures over 1.2425 has seen European interbank lower offers to 1.2400, though USD-CHF is still likely to be the strong source of direction. The dollar pairing has scope for further losses following the correction from 0.9395 to Friday's 0.9215 lows. Short term funds have left offers at 0.9300, while dollar longs that missed out on the downturn have lowered offers to 0.9300.

    [USD, CAD]
    USD-CAD was steady in early North American trade, currently idling over 1.0330, after touching lows of 1.0316 in late Asia. Good bids were still in place at 1.0300 to 1.0280, while sellers were noted from 1.0350. No data from either side of the border was due on Monday, and quiet ranges prevailed. The pairing managed just a 1.0322 to 1.0345 trading band as of the time of this writing.

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