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By XE Market Analysis July 5, 2013 12:05 pm
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    XE Market Analysis: Asia - Jul 05, 2013

    The dollar surged higher in N.Y. trade on Friday, following a better than expected June jobs report. The U.S. added 195k jobs, handily beating 165k forecasts, while back month upwardly revised data helped as well. The dollar steadied following its post-jobs rally, though remained near session highs versus most majors through the session. The paring of equity gains back to near flat on the session didn't have much impact, perhaps as Treasury yields remained elevated. EUR-USD sat near 1.2830 after posting lows under 1.2810, while USD-JPY traded around 100.85, since putting in recent highs of 101.13. Dovish policy implications from the ECB and BoE this week, coupled with a U.S. June jobs report good enough to bring September Fed taper talk back to life, should see a resurgent dollar as a focal point in the days to come.

    [EUR, USD]
    EUR-USD fell to 1.2807 lows from 1.2880 after the U.S. jobs report, and remained under pressure through the session. Treasury yields stayed higher, supportive of the greenback, where 10-year yields moved over 2.70%. Sell stops were seen under 1.2800, though intra day short covering appeared to have kept them out of reach. A dovish ECB, and prospects for Fed tapering as soon as September, may continue to give the dollar the upper hand over the euro, with further EUR-USD downside seen in the coming days.

    [USD, JPY]
    USD-JPY was supported by Japanese importer demand and general dollar firmness ahead of the NFP data. Yesterday's plunge in EUR and GBP provided the USD with a default bid, while JPY also saw light speculative selling as stocks responded positively to yesterday's central bank policy statements. USD-JPY ramped up over 101.10 from 100.20 after the jobs report, aided to a degree by sharply higher Treasury yields. The pairing pulled back toward 100.70 on profit taking, though managed to hold near 101.00 into the close. Longs will eye a push through the top of the Ichimoku cloud around 101.20, but that will have to wait until next week.

    [GBP, USD]
    GBP met good corporate demand at the lows. After crashing to 1.4860 over the NFP data it bounced back to 1.4900. Profit taking was also a factor as buying interest picked ahead of 2013 lows at 1.4832. Meanwhile, EUR-GBP also ran into strong offers into 0.8630 for the second consecutive session, which was also likely to have been corporate related with the cross as levels from mid-April. Reports the U.K. Treasury may sell a 10% stake in Lloyds bank may have added fuel to the Cable rebound out of 1.4860.

    [USD, CHF]
    EUR-CHF edged out highs through 1.2360 over the Swiss CPI release. It came in firmer than expected, but still remained in negative territory overall. The CHF maintained softer levels after it fell on Thursday in the wake of dovish policy outcomes from the ECB and BoE. In the aftermath of the U.S. jobs report, which shifted Fed tapering back to as early as September, the cross rallied toward 1.2380 from 1.2335, while USD-CHF posted one-month highs over 0.9660.

    [USD, CAD]
    USD-CAD pulled back from 1.0550, under 1.0520 into the twin Canada/U.S.employment reports, after failing to take out Thursday's 1.0557 peak. Firmer oil prices kept the pairing under some pressure early, though the underlying bid USD tone kept downside movement limited. The pairing shot up to 1.0609 from near 1.0525 after the combination of stronger U.S. and softer Canadian jobs reports. The rally marked the first time over 1.0600 since October of 2011, where a high of 1.0657 was printed. Option barriers were reportedly extinguished at the figure on the move, though fund and CTA selling was noted above 1.0600. We look for some near term consolidation, with 1.0550 to 1.0600 holding for now.

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