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By XE Market Analysis July 23, 2013 2:54 pm
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    XE Market Analysis: Asia - Jul 23, 2013

    FX trade was light in N.Y. on Tuesday, though the dollar lost ground on the back of softer risk taking sentiment, and a weak Richmond Fed index outcome. EUR-USD was finally able to pierce the a.3200 level decisively, managing 1.3230 highs, before holding steady over the figure through the session. USD-JPY was unable to hold the 100 mark again, and slowly faded lower through the day, The CAD was helped by better Canadian retail sales, while cable stayed firm, though failed to take out 1.5400. USD-CHF gave up some ground, but managed to find support into 0.9350. Wednesday's U.S. calendar brings flash PMI, new home sales, and weekly EIA petroleum inventory data.

    [EUR, USD]
    EUR-USD moved into 1.3195 amid interbank demand out of 1.3180 early on. It stalled ahead of 1.3200 due to sovereign offers, which absorbed demand from model funds on dips. EUR-USD later broke higher, and touched 1.3230 highs into the London close, before settling in just over 1.3210. Previous offers at 1.3200 were replaced with bids, while offers were layered from 1.3230 to 1.3250, with stops above there. A N.Y. close over 1.3200 will be taken as supportive in Asia tonight, though tentative euro longs will likely be quick to turn positions on a move back under the figure.

    [USD, JPY]
    USD-JPY moved to intra day highs of 100.18 in very early N.Y. dealings, though by mid-morning, the lack of upside momentum saw sellers return. The pairing slowly drifted lower through the morning in very light dealings, eventually settling in around 99.50. Persistent sellers over 100.00 should keep gains limited near term, though dips buyers remain into 99.00. As a result, consolidation may continue near current levels.

    [GBP, USD]
    Cable consolidated into the London close. Cable movement was limited to short term flows, as both corporate hedging and retail names kept it capped ahead of resistance into 1.5400. However, once stops were filled through 1.5350 the downside push lost traction due to GBP-cross demand, which included leverage names in GBP-JPY, while residual Swiss interest spilled into GBP-CHF on the coattails of EUR-CHF unwinding. GBP is hanging on positive momentum. However, it could be close to a near-term top after failing to register a higher high today and a close below 1.5400 would support this view.

    [USD, CHF]
    EUR-CHF posted a good recovery into the N.Y. open. A USD-CHF move out of 0.9350 back to 0.9400 and EUR-USD's firm tone lifted EUR-CHF out of 1.2345 to 1.2395 highs. Short term swissy longs were also encouraged to turn positions on the positive risk backdrop and for now Eurozone risks have also receded and was another short term positive for the cross. Both the EUR-CHF and USD-CHF chart are still negative on a daily basis. However, USD-CHF's lack of progress under the 200-dma at 0.9358 yesterday indicates more consolidation, while EUR-CHF can break the recent trend if it forces a close over 1.2400.

    [USD, CAD]
    USD-CAD fell to lows of 1.0302 from 1.0335 after the much stronger Canadian retail sales outcome. Few dollars changed hands on the way down, though buyers returned into the 1.0300 level. Stops were later a factor under the figure, though initially, short covering interest, and noted Asian sovereign and IMM buyers kept them out of reach. USD-CAD later slipped under 1.0300 for the first time since June 20, easing to 1.0287 lows. The 1.0268 June 20 low is the next support level, and new sell-stops were seen building at 1.0260.

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