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By XE Market Analysis December 15, 2014 2:12 pm
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    XE Market Analysis: Asia - Dec 15, 2014

    The dollar headed lower versus the European majors and the yen in N.Y. morning trade on Monday. as another round of oil price weakness hit the equity markets. Risk off was again the driver, which was likely exacerbated some by the deadly terrorist situation in Sydney, Australia. U.S. economic data was largely overlooked, though the softer N.Y. Fed index was countered by better than expected industrial production data. EUR-USD based at 1.2415 before trading over 1.2470, as USD-JPY traded from near 118.80 to a low of 117.62. The dollar recovered some later, as oil rebounded from its trend low under $55.90, allowing Wall Street to pare its earlier losses. USD-CAD meanwhile, trade to July 2009 levels, touching highs over 1.1640.

    [EUR, USD]
    EUR-USD touched intra day lows of 1.2415, after reportedly running into solid option backed selling just after the 10:00 EST options cut. The pairing blipped up to N.Y. session highs of 1.2443 just after the option expiry, before being sold off aggressively. Bids are noted into 1.2400, with stops now under Friday's 1.2385 lows. After earlier noted EUR-USD selling on option backed interest, the pairing recovered to 1.2478 highs before running out of steam. Shorts were squeezed on the move over the post-options cut high of 1.2443, as equities hit their worst levels of the morning. With oil off its lows, and Wall Street on the mend though, the dollar picked up some ground, pushing EUR-USD back under 1.2330.

    [USD, JPY]
    USD-JPY followed Wall Street's lead, falling to session lows of 118.20, as Wall Street gave back all its opening gains. WTI oil later turned under $56, as yields stabilized near lows, keeping pressure on the dollar. U.S. backed fund bids were seen into 118.00, though the acceleration of risk-off conditions saw the figure threatened quickly. USD-JPY later made it to 117.62 lows before recovering briefly over 118.00.

    [GBP, USD]
    Cable is mired in consolidation at the moment, though we continue to class it as being in a bear trend, which has been persisting since the July cycle high at 1.7192. Key resistance is marked at 1.5825-26. The 1.5541 trend low marks support ahead of 1.5500, while the August 2013 low at 1.5102 should be in the crosshairs of bears. The pairing remained on the 1.56 handle through the N.Y. session.

    [USD, CHF]
    EUR-CHF has been bumping along the 1.2010 level the upper level of the rumoured SNB buffer zone between here and the 1.2000 franc cap. SNB boss Jordan said last week that upward pressure on the franc has "intensified," and the central bank said it will enforce the cap with "utmost determination" and is prepared to take further steps if necessary. 'Further steps' would likely centre on negative interest rates, which SNB member Zurbruegg recently argued would be an effective tool as permanent excess liquidity in the Swiss financial system exceeds 300 billion francs. A Bloomberg survey earlier last week found that more than 60% of respondents believe that the SNB will have to use negative interest rates to maintain the cap in the scenario that the ECB commences quantitative easing.

    [USD, CAD]
    USD-CAD broke 1.1600 early in the session, levels last seen in July of 2009. The June 2009 high of 1.1640 was the next upside target, followed by the July 2009 peak of 1.1724. The move to trend highs was the result of a fresh drop in oil prices. The downdraft in oil prices came as OPEC said it has no target for prices. USD-CAD was initially pushed back from its highs, though when oil broke decisively under $57, and Wall Street continued to give back its opening gains, USD-CAD upside continued. The pairing initially rallied to 1.1640, matching the June 2009 high before pulling back marginally. WTI oil plunged to new trend lows of $55.84 lows, and stayed near $56 through the afternoon. USD-CAD later made highs of 1.1654. After a brief recovery on Wall Street, red arrows returned, also helping to keep pressure on the CAD.

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