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By XE Market Analysis May 7, 2014 1:24 pm
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    XE Market Analysis: Asia - May 07, 2014

    The dollar largely meandered inside narrow trading bands in N.Y. on Wednesday, though overall, retained a slightly firmer bias. EUR-USD and cable jockeyed near the bottom of their recent ranges ahead of Thursday's BoE and ECB meetings, where no policy changes are expected. USD-CAD flirted with the 1.09 level, though found solid sellers around the figure. USD-JPY meanwhile, tested and failed to breach the 102.00 level, with sellers coming in on modest rallies, now that is more apparent the BoJ will stand pat on policy for the time being. On the data front, Q1 productivity missed the mark slightly, while Fed chair Yellen didn't ruffle market feathers with her JEC speech.

    [EUR, USD]
    EUR-USD moved back near session lows, as Wall Street rallied on a neutral sounding Yellen, though ranges were again very narrow through the day. The pairing put in a 1.3913 to 1.3938 band since the open, and we look for status quo into Thursday's ECB meeting. The market appears to have largely priced in no policy change, and we see risk of "sell-the-fact" euro reaction.

    [USD, JPY]
    USD-JPY gains were stopped dead in their tracks at 102.00, with Japanese offers reportedly putting a solid top on the pairing. It has since eased back under 101.70, as risk levels fade, though with further BoJ stimulus being priced out, selling into even modest rallies will likely continue.

    [GBP, USD]
    Reported barrier option defense kept cable from the 1.7000 level again on Wednesday, and as a result, some profit taking was seen. The pairing eased back to 1.6956 lows into the N.Y. open, and stabilized between 1.6960 and 1.6980 through the remainder of the session.

    [USD, CHF]
    EUR-CHF held over 1.2180 in N.Y. trade on Tuesday, with diplomatic noises from Russia's Putin helping the risk backdrop slightly. The cycle low of 1.2104 and 1.2100 are considered key support levels. While situation in the Ukraine remains a concern, and a potential supportive factor for the CHF, the threat of SNB intervention into its 1.2000 limit peg is helping to deter franc buying to some extent.

    [USD, CAD]
    USD-CAD moved up from 1.0880 opening levels, though struggled over the 1.0900 level. Real money selling was reported out of Europe, limiting upside to 1.0906. Light stops are noted over 1.0910, with a break there targeting 1.0950.

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