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By XE Market Analysis December 10, 2013 2:04 pm
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    XE Market Analysis: Asia - Dec 10, 2013

    The dollar was mixed in N.Y. dealings on Tuesday, falling again versus the euro and CHF, firmer against the pound and largely unchanged versus the yen. There was little data to drive prices, though Treasury yields eased back, putting some weight on the dollar in general, while inaction from the ECB has put a floor under the euro of late. Cable posted better than two-year highs over 1.6465, though succumbed to profit taking pressure. USD-CHF tested 0.8850, before recovering some, as USD-JPY turned a bit higher after testing support into the 102.50 region. Wednesday's calendar won't provide much direction either, though overall, it appears December trend for the greenback remains downward sloping.

    [EUR, USD]
    EUR-USD printed 1.3773 highs early in the session, up from under 1.3750 at the N.Y. open, and to levels last seen on October 30. The November highs of 1.3832 is expected to provide solid resistance, though in front of that, 1.3800 barrier options were reported. Treasury yields eased back in morning trade, putting some weight on the dollar in general, while inaction from the ECB has put a floor under the euro of late. Note, the IMF this morning called for further ECB action. Later, EUR-USD moved up to 1.3794 highs, where indeed option backed selling was noted. Afternoon dealings saw profit taking move the pairing back under 1.3770.

    [USD, JPY]
    USD-JPY found a footing into 102.60, recovering back over 102.95 as Treasury yields inched off their lows, and Wall Street maintained marginal losses. Offers were noted at 103.00, reportedly a fresh round of Japanese exporter interest, which may contain USD-JPY upside near term. Support is seen at 102.50 and more especially the 102.20-25 region, which marks trend and 20-day moving average support levels, and may encourage stronger buying.

    [GBP, USD]
    Sterling outperformed in the period since Monday's London closing levels, extending to a fresh two-year high 1.6457 versus the USD, a new high for the week against the EUR, and a new major-trend peak versus the JPY. This followed remarks made after the London close by BoE Governor Carney, who said that U.K.'s need for stimulus risks fueling a housing market bubble, mentioning that the central bank has a range of tools it could deploy (which would include raising capital requirements for mortgage lenders), if necessary, to offset a housing market growing a "warp speed." Profit taking in cable resulted in a pullback to 1.6420 into the London close, though the pairing remains in buy the dip mode overall.

    [USD, CHF]
    USD-CHF logged a two-year low to 0.8850 before stabilizing, reflecting broader U.S. dollar weakness, while EUR-CHF has remained settled above the three-month low posted last Friday. The recent run of CHF outperformance has largely stalled following the strong U.S. payrolls report on Friday, which managed to revive risk appetite in global markets, though the issue about whether the Fed will commence QE tapering as soon as this month remains unresolved and could still cause some indigestion to markets. The safe haven Swiss currency will remain sensitive to developments on this front. We expect the Fed to refrain from tapering at its meeting next week, and this implies scope for CHF weakness

    [USD, CAD]
    USD-CAD peaked at 1.0645 in London trade, though has since dipped to 1.0622 in early North American dealings. Firmer oil and gold prices provided some support to the CAD, though standing USD-CAD bids are noted from 1.0620, layered down to 1.0600, with stops below the figure. There was little in the way of data on either side of the border to provide direction, and the pairing was happy to stabilize between 1.0610 and 1.0630 through the remainder of the session.

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