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By XE Market Analysis January 27, 2014 3:10 pm
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    XE Market Analysis: Asia - Jan 27, 2014

    The dollar stabilized for the most part on Monday in N.Y. dealings, after the rout it suffered late last week, though risk taking levels remained weak in light of EM concerns, and the upcoming FOMC meeting, where another leg of taper is in the cards. EUR-USD gave back the 1.37 handle in London, and the pairing steadied above 1.3650 through the session. USD-JPY started on a firmer footing, as it appeared Wall Street would take back some losses. It did initially, though later stocks dove lower again, taking USD-JPY back into 102.25 from over 102.90. U.S. data was mixed, with new home sales sagging, and the Dallas Fed index perking up marginally.

    [EUR, USD]
    EUR-USD was supported by a layer of bids into 1.3650, though traders reported relatively quiet conditions overall. The market looked fairly well balanced through the session, idling largely between 1.3650 and 1.3680. The pairing will likely need to move either under 1.3600 or over 1.3720 for sentiment to shift much. For now, this looks like a consolidating market, especially in front of the FOMC announcement on Wednesday.

    [USD, JPY]
    USD-JPY held its ground early on in the session, maintaining altitude around 102.75, until stocks took yet another tumble. More risk-off sent the pairing to lows of 102.30, though as Wall Street took back its losses in afternoon trade, the dollar returned over 102.60. The technical picture remains bearish for USD-JPY, with last week's price action seeing both the 50- and 100-day moving averages breached along with the completion of a head and should reversal formation, which targets 101.20.

    [GBP, USD]
    Cable settled today near 1.6560-90 through the N.Y. session after volatile trade in recent sessions, U-turning lower Friday after rallying above 1.6650, meeting solid selling in the 1.6660-70 area and subsequently dropping below 1.6600 following dovish BoE-speak. It is a bit of a muddled picture for sterling, though overall, we are bearish on sterling, though more so against the EUR, CHF and JPY than the USD for as long as the backdrop of risk-off persists.

    [USD, CHF]
    The meltdown in risk taking appetite has seen the CHF rally sharply this week, as China and EM concerns grip the markets. Safe-haven flows will likely continue to buoy the CHF until things settle down a bit. The FX market will be wary pushing EUR-CHF too far under 1.2200 however, as sustained downward movement will likely illicit a response from the SNB

    [USD, CAD]
    USD-CAD eased back toward 1.1030 in early North American trade, after failing to reclaim the 1.11 handle overnight. Sellers emerged ahead of 1.1075. Bids at 1.1050 were cleared out eventually, though a layer of corporate interest was noted at 1.1000. The uptick in U.S. equity futures may have helped the risk sensitive CAD recover, though Asian and EM concerns remain, and could limit the CAD's upside potential. Indeed, USD-CAD laterinched over 1.1100, with upside slowed by reported IMM offers into the figure. Weaker oil prices, and another risk-off session kept the CAD under pressure.

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