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By XE Market Analysis March 26, 2014 2:39 pm
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    XE Market Analysis: Asia - Mar 26, 2014

    The dollar was choppy in range bound action in N.Y. on Wednesday, though the greenback was mostly lower overall. EUR-USD traded sides of the 1.3800 mark through the day, managing a 1.3777 to 1.3809 trading band. USD-JPY was rock steady near 102.35 until early afternoon, when the combination of softening equities and lower Treasury yields in the aftermath of a solid five-year auction weighed. The pairing dipped under 102.00 for the first time in a week, though recovered quickly. The CAD and AUD remained strong, on talk of upcoming China stimulus. There was little lasting impact from a stronger durables report, and firmer non-manufacturing flash PMI data.

    [EUR, USD]
    EUR-USD recovered from under 1.3800 on several occasions, with talk of reserve manager buying noted. On the other side of the market though, gains were limited to 1.3810. Lower daily highs have been seen this week so far, indicating euro bulls may be getting tired, but this being said, a clear break of 1.3750 will be needed to shift current rangey mentality.

    [USD, JPY]
    Rate sensitive USD-JPY began slipping in the aftermath of the five-year Treasury auction, which took yields lower. In addition, the sharp turn lower on Wall Street has weighed on USD-JPY as well, taking it under 102.00 for the first time in a week. Support is seen into 101.80-70, though bids are said to be layered down to the level now. USD-JPY has traded 101.90-102.7070 since the FOMC announcement a week ago, with repatriation related selling pressures countered by fund buying interest. Speculation the BoJ will increase its stimulus efforts once the new Japanese sales tax goes into effect should keep the yen under some pressure next week, though until Japanese fiscal year end on Monday, we look for more sideways USD-JPY action.

    [GBP, USD]
    BoE MPC member Weale sounded upbeat on the economy, saying that wage growth is picking up and that, "my sense is things are going quite well." He also said that, "obviously, as the economy recovers, the interest rate isn't going to stay at half a percent indefinitely." This helped set the tone for cable in London, and its rally continued in N.Y., taking it to 1.6589 highs.

    [USD, CHF]
    EUR-CHF rose to a new high of 1.2234 in London, which is the highest level seen since February 1. The gains didn't last though as the cross spent the entire N.Y. session moving lower, eventually dipping under 1.2200. Nervous equity markets, led by NASDAQ weakness, kept the CHF bid up through the session, while just under the surface, Crimea remains a concern.

    [USD, CAD]
    USD-CAD stumbled to 1.1123 lows in London, and recovered back over 1.1160 in early dealings. Slightly wider U.S./Canada interest rate differentials may have weighed a touch on the CAD, though overall, range-trade mentality is in effect. USD-CAD bids were noted into 1.1120, though the pairing later filled them in and touched 1.1090, its first time under 1.11 since March 18. Stops under 1.1120 support were apparently a factor on the move lower, though talk of corporate bids under the figure limited losses, with the pairing moving quickly back over 1.1100.

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