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By XE Market Analysis June 20, 2013 3:04 pm
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    XE Market Analysis: Asia - Jun 20, 2013

    The dollar continued its post-FOMC rally, moving broadly higher through the morning session. Risk appetite overall was crushed, and weighed heavily on equities and commodities. U.S. economic data was mixed, with jobless claims a touch firmer and leading indicators a tick lower than expected. The Philly Fed index and existing home sales on the other hand, both came in north of forecasts. After opening near 1.3220, EUR-USD made its way to lows just above 1.3160. Short covering took the pairing back to 1.3220, though selling into strength appears to be in place still. USD-JPY touched highs near 98.25, though here too, profit taking, and Japanese backed selling over the figure weighed into the afternoon session.

    [EUR, USD]
    EUR-USD short covering ran its course into the afternoon session, though the pairing managed a rebound from lows near 1.3160 to 1.3240, before edging back under 1.3220. A N.Y. close under 1.3200 could be crucial for near term direction, opening the door for Asian session weakness. The June 6 gap higher, from 1.3075 has yet to be filled in, and may present the market with an initial downside target. With the eurozone still in recession and U.S. economic fundamentals improving the outlook for the EUR remains on the downside. The technical backdrop also shifted dramatically to the downside in the wake of the Fed, which saw EUR drop from over 1.3400.

    [USD, JPY]
    The dollar added to gains after the stronger Philly Fed and housing sales data, taking USD-JPY up to highs over 98.20, after opening at 97.80. Japanese exporters were reportedly good sellers into the highs, pressuring the pairing back to 98.00 A later move under 97.80 brought sell stops to bear, with more triggered into the close at 98.50, resulting in a move toward 98.25.

    [GBP, USD]
    Cable traded within reach of 1.5500 as EUR-GBP moved into intra-day lows just below 0.8525. The cross was pressured from early Europe, but it was U.K. retail sales that unlocked lower levels as 0.8550 and 0.8540 gave way. Cable shorts are still in play due to underlying dollar strength, but we suspect that long standing shorts may see value in lightening exposure at current levels. Also adding some topside attraction in the near-term are good size 1.5500 expiries for tomorrow's N.Y. cut. A move above 1.5500 would shake out some weak positions, though the downturn from Monday's 1.5753 trend high remains a negative influence on the daily chart.

    [USD, CHF]
    EUR-CHF dipped into 1.2300 after the SNB left policy unchanged as expected. The cross pulled back with USD-CHF in N.Y. trade, wth the former touching 1.2250, and the latter moving under 0.9270. The SNB policy statement noted that risks to the economy still remain high and it did not see inflation approaching the 2% price stability threshold for the entire forecast horizon, which backs expectations that the SNB will continue with its easy policy bias. USD-CHF could drive EUR-CHF price action ahead.

    [USD, CAD]
    USD-CAD remained firm over 1.0360, after peaking near 1.0380 ahead of the North American open. The loonie wasn't spared from the broad post-FOMC USD rally, as the ugly risk backdrop continued to take its toll. Oil, gold, and commodities in general were all hammered today, as were global equities. The June 5 USD-CAD high of 1.0380 provided interim resistance, though a break there will likely see the May 29, 2013 peak of 1.0420 targeted eventually.

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