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By XE Market Analysis July 22, 2013 2:32 pm
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    XE Market Analysis: Asia - Jul 22, 2013

    FX trade was fairly quiet in N.Y. on Monday, though the dollar lost ground to virtually all major currencies. Incoming data was weaker than expected, as both existing home sales, and the Chicago Fed index missed the mark. Equities however, manage to hold onto modest gains through the session, while Treasury yields were nearly flat on the session. The U.S. calendar is light on Tuesday, with just the FHFA home price index, and the July Richmond Fed index on tap.

    [EUR, USD]
    EUR sentiment improved as peripheral EU spreads came in, as Portugal's president voiced confidence in the government. EUR-USD traded over 1.3200 a couple of times, tripping stops at 1.3210, on its way to highs over 1.3220. Real money and sovereign backed offers emerged however, though downside was limited to 1.3185, indicating further gains may be in the cards near term.

    [USD, JPY]
    USD-JPY tripped sell-stops under 99.50 at mid-morning, though found buyers ahead of 99.25, and has edged back over 99.60 in fairly light dealings. Talk of Japanese bids into the lows was noted, and appeared to stem the bleeding for now. This said, heavy offers are seen into the 100.00 mark, so gains above 99.80 will likely be limited for now.

    [GBP, USD]
    Cable extended gains as the dollar experienced another round of selling pressure. Ahead of the U.S. data Cable cleared away resistance at 1.5345-50 and moved through 1.5380. Buyers are lining up into 1.5350 and 1.5330-40 to keep momentum with the topside. Longs are immediately focused on resistance that lies just ahead of 1.5400 barriers, which may slow the move higher initially. However, since the BoE minutes last week the short term picture has shifted dramatically in favour of higher levels. The BoE unexpected vote 9-0 in favor of a steady hand, though are exploring other ways to boost the economy ahead of the August meeting, where details on forward policy guidance will be firmed up.

    [USD, CHF]
    USD-CHF broke the 200-dma for the first time since late June under 0.9358. Follow through selling was limited to 0.9345 on profit taking, while EUR-USD also met some natural supply over 1.3200, which has temporarily helped the dollar cause. The technical backdrop is looking weak for the dollar via several currencies. EUR should have scope for higher levels on a series of higher lows in the last few sessions. USD-JPY is looking heavy after it was unable to sustain a run on 101.00 overnight and headed under 99.50 and Cable is up on both a fundamental shift and bullish technical studies. We think this will guide USD-CHF traders and selling into strength looks likely.

    [USD, CAD]
    USD-CAD touched 1.0332 lows early, nearly a two-week base, before rallying modestly higher toward 1.0350. Support is seen at 1.0322, coinciding with the July 11 low, and a break there could bring further selling pressure to bear. On the other side of the market, offers were in place from 1.0370. The pairing eventually eased to a 1.0323 low, as gold and equities moved higher.

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