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By XE Market Analysis January 9, 2015 5:18 pm
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    XE Market Analysis: Asia - Jan 09, 2015

    The dollar rallied in the immediate aftermath of the better U.S. employment report, though as risk appetite eroded, the greenback solid broadly lower. The hostage standoff in France, followed by the killing of the hostage takers by security forces left a bit of a pall on the markets, pushing risk taking levels lower. Wall Street took a hit on Friday, as Treasury yields slipped back. EUR-USD fell to 1.1763 lows from opening levels near 1.1815 after the jobs data, though later rallied to highs of 1.1845. USD-JPY meanwhile, touched 119.77 before falling to 118.43 lows. USD-CAD made a 1.1890 peak after a soft Canadian employment report, and stayed firm through the session as oil prices faded yet again.

    [EUR, USD]
    EUR-USD stayed down initially, despite the latest Wall Street sell off, currently near 1.1785, after basing at 1.1763 after the jobs report. Support comes in at 1.1755, Thursday's low, though as equities continued to move lower, a move back above 1.1900 was in the cards, with the pairing peaking over 118.40. A major U.S. investment bank downgraded its EUR-USD forecasts, according to sources, and now sees the pairing at 1.1100 in six months, from its previous 1.2000 forecast, and 1.0800 in one year, down from 1.1500 previously. The bank calls for EUR-USD parity at the end of 2016.

    [USD, JPY]
    USD-JPY spiked up to over 119.75 from under 119 after the U.S. jobs report, though again struggled iver the 119.50 level. As equities, yields, and generaly risk taking fell off the table, USD-JPY fell back to session lows of 118.43.

    [GBP, USD]
    Cable fell back to 1.5100 from over 1.5175 after the jobs report, though bounced back to 1.5170 as the dollar faded broadly. Cable had risen in London ahead of the production and trade data releases amid market talk that the goods trade deficit was likely to shrink more than expected, which it duly did. Overall though, sterling remains in sell-the rally mode.

    [USD, CHF]
    EUR-CHF has come under fresh pressure in recent days, once again amid general euro weakness, and has logged a low of 1.2007 today. Swiss foreign currency reserves data for December, out today, show reserves rose to CHF 495.1 bln (a record) from CHF 462.7 bln in November, confirming the SNB's intervention on Dec-18. The intervention was additional to the implementation of a negative deposit rate, which was cut to -0.25%, also on Dec-18. The rouble crisis and euro weakness saw EUR-CHF come under pressure in December, and on Dec-16 the cross came within six pips of SNB's the 1.2000 limit. The cross spiked to 1.2096 on Dec-18 on the intervention and the announcement of the negative deposit rate. This was the first time that the SNB has intervened in spot since 2012. With the ECB set to pursue QE, the SNB will have its work cut out to defend 1.2000 during the first half of 2015.

    [USD, CAD]
    USD-CAD rallied following the mix of softer Canadian jobs data, and a forecast beating U.S. report. The pairing moved to 1.1890 highs from 1.1805, above the previous trend high of 1.1874 posted on Wednesday. WTI crude has been USD-CAD supportive as well, as the front month contract fell to intra day lows under $48.00 from over $48.80. Offers are now seen at 1.1900, though stops should be a factor over the figure. The pairing later pulled back into 1.1860, where it remained through the afternoon.

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