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By XE Market Analysis January 23, 2014 5:05 pm
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    XE Market Analysis: Asia - Jan 23, 2014

    The dollar was sharply lower on Thursday, though weakness set in during the Asian session overnight, where a soft China PMI print hit the market. Later in Europe, stronger EU PMI's rallied the euro. In the U.S., the combination of China data and earnings misses weighed heavily on risk taking levels. Wall Street was hit hard, and Treasury yields slid lower in tandem, weighing down the greenback further. On the economic front, weekly jobless claims were in line with expectations, as were leading indicators, though existing home sales missed the mark slightly.

    [EUR, USD]
    EUR-USD opened near 1.3640, and slowly but steadily climbed to 1.3694 highs. The pairing straight-lined near session highs later in the session, finding bids under 1.3675 and offers over 1.3690. The firmer EU PMI's this morning were the major euro drivers, though option related selling is reported ahead of 1.3700 now.

    [USD, JPY]
    USD-JPY started the session near 104.10, though had been on the decline since the Asian session, where weaker China PMI data dented sentiment. Selling picked up speed as stocks spiraled lower, and yields softened, with heavy offers noted on the move under 103.90. The pairing later touched 102.99 lows before finding some poise. Bigger picture, we continue to expect that USD-JPY's major-trend peak at 105.44 to fall as the BoJ's expansive monetary policy should continue to drive the yen to fresh lows during 2014.

    [GBP, USD]
    Cable surged to levels last seen in May of 2011, peaking at 1.6643 in late N.Y. trade. The pound did however, lose fround to the euro, following the stronger EU PMI data. The U.K. fundamental picture is somewhat muddy. We had the unexpected drop in unemployment to 7.1% in November, but the January CBI distributive trades and industrial trends surveys disappointed, describing a moderation in economic recovery following a patch of above-trend growth in the second half of last year.

    [USD, CHF]
    EUR-CHF has consolidated gains above 1.2300 after recovering from the Dec-17 low of 1.2166. Price action has been pretty choppy over the last couple of weeks, but overall we expect the currency to remain on a bigger-picture softer footing as a consequence of the unwinding in the Swiss currency's safe haven premium as the period of Fed policy uncertainty ended with its decision to commence QE tapering. Resistance comes in at 1.2400, support at 1.2320 and 1.2300.

    [USD, CAD]
    USD-CAD reportedly ran into very solid bids under 1.1100 early in the session, with corporate and option types seen stepping in. Many buyers likely missed the boat after the BoC on Wednesday, and took quick advantage of the moderate dip to step back in. The pairing rebounded to highs over 1.1161, with the first area of resistance now seen at 1.1175. In the bigger picture, the 1.1675 level is being noted, the 62% retracement of the 2009/mid-2011 plunge.

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