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By XE Market Analysis December 23, 2014 1:54 pm
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    XE Market Analysis: Asia - Dec 23, 2014

    The dollar rallied broadly in N.Y. trade on Tuesday, taking EUR-USD to new 2.5 year lows of 1.2165, and USD-JPY to just shy of December 8 highs, peaking at 120.80. A sharply higher U.S. Q3 GDP revision was the major driver, with the quarter's growth pace upped to 5.%. Equities responded favorably, resulting in the DJIA trading over 18,000 fro the first time, and taking the S&P 500 to record highs as well. Yields edged higher, also supportive of the greenback. Elsewhere, cable moved to better than one-year lows, trading on the 1.54 handle, while USD-CAD attempted to take out last week's trend highs, though was ultimately pushed lower on pre-holiday position squaring.

    [EUR, USD]
    EUR-USD traded to 1.2165 trend lows after the upgraded U.S. GDP data. Option backed selling was reported on the move under the figure, though it appeared some stale shorts were covered on the initial dip under the figure, following the long wait for a move to the 1.21 handle. The next downside target will be the 2012 low of 1.2134, which could come as soon as the overnight session. The euro showed little interest in reclaiming the 1.22 handle through the N.Y. afternoon session.

    [USD, JPY]
    USD-JPY was on a tear since the U.S. GDP release, ramping up to 120.80, levels last seen on December 8, when the pairing peaked over 120.84. Standing offers (Japanese) are now noted from 120.80 up to 121.00, while option barriers at the figure are expected to be defended.

    [GBP, USD]
    Sterling remains in sell-the-rally mode, and as the dollar picked up ground on Tuesday, cable fell to levels last seen in late August 2013. The pairing touched lows near 1.5485, with its next target at 1.5428, seen on August 28, 2013. The pound has lost some ground to the euro as well, as EUR-GBP moved up toward 0.7870, after putting in a one-month low of 0.7813 on Friday.

    [USD, CHF]
    EUR-CHF spiked toward 1.2100 from the 1.2010 area last week after the SNB implemented a negative interest rate of -0.25%. The cross has since edged lower from 1.2045 and appears set to remain in a narrow range on either side of 1.2030.

    [USD, CAD]
    USD-CAD zigged and zagged after the mix of data, where the better Canadian GDP outcome helped the CAD briefly. Since its dip to 1.1625, USD-CAD rallied to four-session highs of 1.1666, following the greenback's broad rally. Last week's 1.1673 high was the key level to watch, though fresh trend highs were not to be. USD-CAD failed to take out the previous high, and was later pushed back to intra day lows of 1.1600. Sell-stops were reported just under 1.1600, though remained out of harm's way.

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