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By XE Market Analysis June 11, 2013 3:01 pm
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    XE Market Analysis: Asia - Jun 11, 2013

    FX trade was thin and choppy in N.Y. on Tuesday, with the dollar heading south once again. Rumors of impending Fed tapering supported the greenback initially, though a counter rumor later circulated, saying a September slowdown would be more likely, took the USD back toward session lows. Aside from wholesale data, which was ignored, the U.S. calendar was empty. Equities hit the skids early, though recovered nearly all their gains at one point, which helped the USD for a time. From there though, stocks faltered again, perhaps as riots in Istanbul heated up. EUR-USD traded under 1.3240 on Fed rumors, though quickly moved over 1.3300 for a time, when the impending tapering rumors were countered with "not until September" rumors. USD-JPY was fairly steady until late afternoon, when it collapsed toward 95.60 in very thin trade. A USD-JPY move on 95.00 should bring some long-term money out of the woodwork. Japanese importers were heavy dollar buyers last week and there were footprints from semi-official names, while those that are betting on eventual Fed tapering may also see some long-term value down there.

    [EUR, USD]
    EUR-USD touched lows near 1.3230 after opening the N.Y. session around 1.3290. Selling picked up under 1.3255, the earlier London low, with intra day accounts bailing out of long positions. The rumor mill may have had something to do with the sell-off, as spurious talk of Fed tapering made the rounds. The vague rumor had the Fed tapering $5-$10 bln beginning next week. EUR-USD continued to trade in a choppy fashion, as it moves back over 1.3275. Bids seen in place at 1.3220 put a floor under the pairing, while talk of Asian sovereign buying helped the euro higher. EUR-USD completed the round trip, testing briefly over 1.3300. Fed rumors again were a driver, where a Medley type report surfaced that there will be no taper until September.

    [USD, JPY]
    USD-JPY chopped either side of 97.00 in tight ranges since it recovered from European morning lows under 96.50. Japanese dealing desks suspect 95.00 could attract in the coming sessions as nervous leverage accounts reduce exposure to risky positions. The recent sell-off in emerging markets has also compounded the move as markets question whether Japan has the stomach to deal with the unintended consequences of the much-vaunted Abenomics growth strategy. USD-JPY plunged under 96.00 again in thin afternoon trade. The pair dove from the 96.70 area to 95.60 before reviving to 96.20 again. Reports circulated that S. and N. Korea have called off talks due to questions over the attendence list after just jump-starting face to face negotiations over the weekend, though this could be a coincidence and there isn't much info on the move other than liquidity air pocket, etc.

    [GBP, USD]
    Cable triggered buy stops through 1.5605-10 and 1.5645 as the dollar experienced another modest downdraft. U.K. think tank NIESR also released its latest estimates for U.K. GDP. It estimated growth of 0.6% in May from a revised 0.8% outturn in April from 1% previously reported. Cable longs are gearing up for a retest of last week's previous highs at 1.5684, but very good selling pressure was noted at the highs reportedly from an active Asia account. After the earlier reports of Asian demand in EUR there is speculation that one name may have had some EUR-GBP to work through the market today. However, movement remains disjointed and choppy.

    [USD, CHF]
    EUR-CHF quickly lost altitude after the N.Y. options cut. However, blink and you would have missed it. It did a round trip from 1.2295 down to 1.2240 and then backed up 1.2285 in a one minute of trading. USD-CHF also fell from 0.9275 to 0.9230 and then experienced another wave of selling to take it to 0.9222 lows as deleveraging threatens to tip USD-CHF through mid-April support levels just in front of 0.9200. EUR-CHF should find local buyers on dips as the 200-dma represents strong support at 1.2220.

    [USD, CAD]
    USD-CAD sat up at 1.0245 into the North American open, supported by lower oil and gold prices, and sharply lower equities. AUD-USD weakness likely contributed to the loonie's softer patch, with the A$ suffering on the back of China growth concerns. USD-CAD offers were noted from 1.0260, and again at 1.0300, with stops likely about the figure. With nothing much on either the U.S. or Canadian calendars, focus remained on the risk backdrop. As equities recovered, USD-CAD flirted with Asian session lows under 1.0180, though ran into standing bids at the level. Stops were said to be building at 1.0165, just under Monday's North American low.

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