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By XE Market Analysis July 1, 2013 3:07 pm
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    XE Market Analysis: Asia - Jul 01, 2013

    The dollar ended mostly lower in light N.Y. trade on Monday, though ranges overall were relatively narrow. A better U.S. manufacturing ISM outcome supported the dollar and equities initially, but USD gains were shallow and short lived. EUR-USD found good support ahead of 1.3000 before turning moderately higher, while USD-JPY fell short of the 100.00 mark, and reversed to 99.65 in afternoon dealings. Trade may remain light this week, as dealers keep a low profile ahead of the ADP employment survey on Wednesday, the ECB meeting on Thursday, and the official June U.S. jobs report on Friday.

    [EUR, USD]
    EUR-USD touched session lows of 1.3015 after the better U.S. ISM data, though with a layer of bids seen into the figure, the pairing reversed higher. Gains stalled out over 1.3060, and London short covering was largely responsible for the move from 1.3040 to the highs, with position paring coming after the euro failed to test the 1.3000 region. Standing offers were in place at 1.3060-80, which contained through the afternoon.

    [USD, JPY]
    USD-JPY edged out new intra-day highs of 99.86 as U.S. account demand emerged at the 99.60 area. USD-JPY is slowing progressing on the 100.00 level, where good size outstanding option barriers are noted. It is looking likely that this level will give way ahead of key event risks later this week. After the Japanese Tankan report overnight recovery expectations should support the Nikkei and fuel more interest for yen-funded carry trades.

    [GBP, USD]
    GBP jumped in London on a better U.K. manufacturing PMI reading and a pick up in consumer credit. Cable topped near 1.5250 in Europe, and managed to maintain the 1.5200 level through the N.Y. session. GBP should continue to meet selling pressure on upticks as last week's break lower maintains the bias on lower levels. The focus for U.K. markets will be on the BoE as Carney takes charge of his first MPC meeting later this week, though no change is expected.

    [USD, CHF]
    CHF tracked demand for yen-funded carry trades, which boosted EUR-CHF over 1.2365 and USD-CHF reached 0.9500. The 100-dma at 0.9413 is still providing a prop for the market, with short term accounts placing bids ahead from 0.9430-40. EUR-CHF is making gradual progress, leaving it abive Friday's 1.2355 highs. There are a congestion of orders that are layered into 1.2370, related to highs from mid-June, and could result in a topside failure.

    [USD, CAD]
    USD-CAD fell to session lows under 1.0490 from near 1.0530 after the better U.S. ISM outcome, though with Canada on holiday, CAD trade was thin. USD-CAD buyers were quick to return under 1.0500, and range trade set in for much of the remainder of the session. Offers were seen at 1.0530, with more buyers down at 1.0480.

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