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By XE Market Analysis August 20, 2013 1:43 pm
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    XE Market Analysis: Asia - Aug 20, 2013

    The dollar moved lower versus the European majors and the yen in N.Y. on Tuesday, while commodity backed currencies slipped on Asian growth concerns. EUR-USD moved to trend highs over 1.3450, as USD-JPY dipped back under 97.00 before recovering some. USD-CAD touched 1.0400, as AUD-USD fell under 0.9030 from over 0.9200 on Monday. There was no data to move the dollar, though it appeared moderating Treasury yields put some weight on the buck. Equities managed modest gains for a change, which may have mitigated some of the USD'S losses. Wednesday's U.S. calendar is again light, though focus will be on the FOMC minutes.

    [EUR, USD]
    EUR-USD cleared long-term resistance through 1.3415-20, which marked the top of the range since mid-to-late June. Comments from BoJ Governor added some traction to the move, though EUR had been flagging a potential squeeze for several sessions as the dollar struggled to assert itself since late last week even with Treasury yields eyeing a break out on the topside. There were strong offers at 1.3440 related to option barriers at 1.3450, though these were eventually taken out. EUR-USD touched 1.3452 highs, extinguishing barrier options in the process. Offers returned however, with some fading of the latest move seen into Wednesday's FOMC minutes. Good resistance is expected from 1.3480-1.3500, but key will be the euro's ability to close the N.Y. session over 1.3400.

    [USD, JPY]
    U.S. spec funds positioned for a USD-JPY drop amid reports that several names sold out of N.Y. from the 97.30 area at the N.Y. open. BoJ Kuroda clarified BoJ's policy stance however, stating it will do whatever it takes to beat deflation. Kuroda said Japan's economic improvement is steadily proceeding and it is seeing a positive cycle of output, income and spending. FX traders think this is likely to reinforce expectations of more BoJ stimulus next year and USD-JPY rebounded to 97.45 from 97.05. Very large USD-JPY stops are tipped under 96.80 behind interim support between 97.95 and 97.80, though following the early rally, USD-JPY faded back to 96.95 lows before rallying to 97.25.

    [GBP, USD]
    Cable broke to 1.5695 highs as EUR-USD gains lifted it within a few pips of 1.5700 barriers. EUR-GBP's push up to 0.8575 fueled light GBP sell-interest, though this barely dented the Cable upside. Cable topside hedging continues to go through, with fund names hedging for a break above trendline resistance around 1.5750. The front end of the curve has seen good interest in the last 24 hours and last week two-month and three-month dealt in large size at 1.6000.

    [USD, CHF]
    EUR-CHF experienced a volatile European morning session. Initially funds headed to safety, which tipped the cross under 1.2300 to 1.2285 lows following a negative lead from stocks and weak technical levels. The downturn in EUR-CHF was accompanied by investor uncertainty as the prospect of higher rates fueled a flight to safety. N.Y. dealings saw the cross turn higher, though this was largely a function of a firmer EUR-USD, as USD-CHF stayed under 0.9200.

    [USD, CAD]
    USD-CAD moved to better than one-week high over 1.0400, with buying stepping in on the move over 1.0375. Sellers were seen in place over 1.0400, though sizable stops are noted from 1.0410. Softer oil prices may have weighed on the CAD slightly, as WTI shed over $1.00/bbl to $106.00, while bigger picture, fund liquidation of commodity backed currency positions may have been a factor. The thinking is the growth outlook may be impaired should the Fed and other central banks pull back on stimulus.

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