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By XE Market Analysis January 5, 2015 3:42 pm
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    XE Market Analysis: Asia - Jan 05, 2015

    Most of the FX action took place ahead of the N.Y. session, where the dollar was relatively steady. After posting nine-year lows of 1.1860 in early Asia, EUR-USD ranged between 1.1893 and 1.1941, staying over the figure for most of the session. The sharp slide on Wall Street weighed on USD-JPY, taking the pairing from 120.10 to 119.38 lows. Despite WTI crude trading on the $49 handle, USD-CAD moved under 1.1800, with profit taking the driver there. Cable found support into 1.5200, as USD-CHF stayed over 1.0050. Aside from slightly softer auto sales data, the U.S. calendar was empty. Stocks put in their worst performance in nearly a month, as yields continued to edge lower.

    [EUR, USD]
    After edging under 1.1890 into the open, EUR-USD later topped at 1.1941, reportedly running into offers in place from 1.1940-50. The pairing later eased into 1.1915, though intra day stops noted at 1.1885 were never in jeopardy. The euro will likely remain in sell the rally mode into the January 22 ECB meeting, where following dovish tones from Draghi over the weekend, QE seems to be almost inevitable.

    [USD, JPY]
    USD-JPY found a floor under 119.40, after falling from near 120.10 at the open. The dive on Wall Street, and eroding Treasury yields were the main driver this morning, though support is touted into 119.30, which was the N.Y. low on December 31. The pairing later rebounded over 119.65, and stabilized off its lows through the remainder of the session.

    [GBP, USD]
    Sterling dropped on the construction PMI miss out of the UK, sending Cable from 1.5312 to a 1.5204 low later in N.Y. Good bids were reportedly parked at the figure which prompted a rebound over 1.5260 in Afternoon dealings. The August 2013 low at 1.5102 should be in the crosshairs of bears.

    [USD, CHF]
    EUR-CHF fell to a nearly three-week low of 1.2013 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-CHF meanwhile, rallied to 1.0108, its best level since September, 2010.

    [USD, CAD]
    USD-CAD eased off its overnight trend high of 1.1842, touching 1.1762 lows in early North American trade. The pairing's over 220 point romp higher from Friday's low under 1.1620 appeared to be taking a breather, despite WTI crude touching new trend lows under $50.60/bbl. Profit taking was the major impetus, with support not seen until the 1.1700 level. The next major upside target will be the May 2009 high of 1.1953.

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