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By XE Market Analysis August 19, 2014 3:03 pm
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    XE Market Analysis: Asia - Aug 19, 2014

    The dollar rallied again on Tuesday, taking EUR-USD to new trend lows of 1.3314, and USD-JPY near 102.90. Markets were buoyed by strong housing data, while a relatively calm geopolitical backdrop saw Wall Street rally again, and risk levels in general improve. Oil and gold prices fell, as Treasury yields edged higher. Defense of 1.3300 euro options was reported, keeping the figure out of reach for now, while USD-JPY slowly churned through Japanese exporter offers. Cable stayed down after softer U.K. inflation data, while USD-CAD trade up to near 1.0950 on the greenback's broad gains.

    [EUR, USD]
    The dollar rallied after the mix of data, where better housing data drove the move. EUR-USD fell to trend lows of 1.3319, falling from 1.3355. EUR-USD fell to trend lows of 1.3319, falling from 1.3355. The pairing later continued to trade with a heavy bias, touching lows of 1.3314. Defense of 1.3300 barrier options can be expected under 1.3310, with a good volume said to be rolling off tomorrow and Thursday. As a result, a move under 1.3300 may have to wait a day or two, and some short covering may be in the cards near term. Resistance is now seen at 1.3340.

    [USD, JPY]
    USD-JPY made slow but steady progress higher, eventually peaking at 102.89, as it ground through noted Japanese exporter offers. The positive risk backdrop allowed the pairing to add to Monday's modest gains, with the near term target set at 103.00. There are liable to be a good number of profit taking related sellers into the figure, though stops are not noted until 103.10, above the July 30 peak.

    [GBP, USD]
    Sterling extended to a fresh four-month low of 1.6612 against the dollar. The latest dip coattails EUR-USD as the pound has established a steadier footing against the euro and yen after the across-the-board drop during the London AM session following weak inflation data. U.K. CPI fell to 1.6% y/y from 1.9% y/y in June, below the median forecast for 1.8% y/y, while PPI output prices dropped into negative territory for the first time this cycle.

    [USD, CHF]
    EUR-CHF held 1.2100 in N.Y. on Tuesday, as geopolitical fears abated to a degree. This said, it will not take much in the way of new threats to bolster the CHF again. In the meantime, traders be reluctant to push the cross much further, 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 made intra day highs of 1.0949, moving higher despite the better risk backdrop (though softer oil and gold prices offset), as USD gains remained broad through the session on Tuesday. Some residual corporate buying was reported, with those missing the boat under 1.0900 stepping in this morning. Light stops were noted over 1.0940, though two-way interest is seen from 1.0950 to 1.0980.

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