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By XE Market Analysis December 30, 2014 2:03 pm
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    XE Market Analysis: Asia - Dec 30, 2014

    FX dealings were quiet on the last full trading day of 2014, though while the dollar started out on a weaker footing, it made up modest ground after the London close. Softer than forecast housing price data and consumer confidence had little impact overall. EUR-USD peaked just over 1.2180 before easing back under 1.2160 into the close, as USD-JPY traded under 119.00 early before rallying back to 119.50. Cable traded a narrow band, mostly over 1.5550, as USD-CAD idled into the 1.1600 level, where bids were reported. With Japan closed tonight, and an early exit expected for most ahead of the New Year, activity overnight is expected to be very light.

    [EUR, USD]
    EUR-USD topped out just over 1.2180 after the softer than expected confidence data, before easing back under 1.2160 in light trade. Activity was spotty, though underperforming European equities may have ultimately been a drag on the euro. Low-volume, year-end flows however, were likely not giving an accurate picture of sentiment today.

    [USD, JPY]
    USD-JPY eased under 119.00, basing at 118.87 following weaker U.S. confidence data. Slightly easier yields, along with risk-off trade into year end put pressure on the pairing, though light buying under the figure was enough to see the pairing return to 119.60 in thin afternoon dealings.

    [GBP, USD]
    Cable remains in the grip of a bear trend, which has been persisting since the July cycle high at 1.7192. Resistance is now marked at 1.5634 (20-day moving average) and 1.5700, support at 1.5500 and 1.5486. The August 2013 low at 1.5102 should be in the crosshairs of bears. The drop in UK inflation to a six-year low of 1.0% has strengthened the dovish voices at the BoE's MPC.

    [USD, CHF]
    EUR-CHF has established a range below 1.2050 after spiking to a 1.2096 peak Dec-18 after the SNB implemented a negative interest rate of -0.25%. SNB member Zurbruegg recently argued that a negative interest rate would be an effective tool as permanent excess liquidity in the Swiss financial system exceeds 300 billion francs. SNB boss Jordan had said recently 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.

    [USD, CAD]
    USD-CAD traded into 1.1600 from 1.1628 North American highs. The modest move came with oil prices retracing $1.50/bbl higher from overnight trend lows, with WTI at one point up over 54.10. Bids were noted at 1.1600-1.1590, and downside progress was halted. Light stops expected underneath.

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