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By XE Market Analysis December 30, 2013 12:26 pm
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    XE Market Analysis: Asia - Dec 30, 2013

    FX trade was uneventful in N.Y. on Monday, as the year wound down, and as desks stayed out of harms way. Conditions were thin, and the dollar did ease lower fairly broadly. EUR-USD reclaimed the 1.3800 handle, as USD-JPY faded, but found support into 105.00. Cable moved back over 1.6500, as USD-CAD slipped toward support at 1.0650. On the economic front, November pending home sales inched up, though missed forecasts, while the Dallas Fed index improved. Equities were on either side of flat through the session, while Treasury yields softened a touch.

    [EUR, USD]
    EUR-USD crawled steadily higher in very thin trade, opening the session near 1.3775, and eventually peaking just under 1.3820. The dollar's broad move lower was largely put down to year-end position squaring, though we continue to look for the euro to soften once the New Year kicks off. The slowly changing course of the Fed, and seemingly improving U.S. economy, along with a still dovish ECB should come to the USD's aid early in 2014.

    [USD, JPY]
    USD-JPY made a fresh trend high of 105.41 for a fourth consecutive day during the last business day of the year in Tokyo. There were reports of Japanese exporters on the offer, which helped cap the dollar ahead of the 105.50 level. Japanese markets will be closed from tomorrow until next Monday. After opening near 105.25 in N.Y., the pairing followed the dollar's general path lower as well, though managed to find support into 105.00 in light afternoon dealings.

    [GBP, USD]
    There remains a strong fundamental case in favor of sterling. Hometrack house prices data today showed fresh acceleration, and U.K. yields have recently been rising quicker than other G7 yields. N.Y. dealings saw cable rebound over 1.6525, with gains coming in concert with the dollar's broadly softer tone. Volumes were very light overall, though sterling continues to look like an out-performer. The big test for cable will come next week, as the New Year kicks off in earnest.

    [USD, CHF]
    USD-CHF got caught up in the EUR-USD centered, thin market volatility on Friday, but EUR-CHF has remained comfortably above 1.2200. EUR-CHF had breached above 1.2200 ahead of the Christmas/new year holiday period, recovering from pre-Fed tapering decision low of 1.2166, which was the lowest level seen in eight months. The gain in the cross had reflected an unwinding in the Swiss currency's safe haven premium as the period of Fed policy uncertainty ended.

    [USD, CAD]
    USD-CAD gave back the 1.07 handle, after ranging between 1.0703 and 1.0727 during the overnight session. The pairing touched 1.0685 lows early on, as domestic names were seen on the offer. Initial support was expected at 1.0650, which was tested into the London close. The December 20 peak of 1.0737 was never really in the market's sights overnight, and it appeared position paring into year-end was behind the CAD strength on Monday.

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