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By XE Market Analysis May 16, 2014 1:34 pm
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    XE Market Analysis: Asia - May 16, 2014

    FX trade was fairly uneventful in N.Y. on Friday, with narrow ranges holding up overall. Better than expected housing starts, was offset by a softer Michigan sentiment outcome later, though neither report had much dollar impact. EUR-USD traded under 1.3700 early in the session, though recovered briefly toward 1.3720 before settling into the 1.3700 area. USD-JPY rallied to session highs of 101.67 after the housing data, though with yields soft, and equities mixed, the pairing eased back into 101.50.

    [EUR, USD]
    EUR-USD was knocked back below 1.3700 after a weak rebound in early London trade, which saw the euro stall at 1.3727, five points shy of Thursday's peak. The euro touched N.Y. lows of 1.3687 after the U.S. housing data, though as yields stayed low, and equities stumbled, pre-weekend short covering took hold, taking the pairing to 1.3718 highs. Support is seen at 1.3643, the February 27 lows, and we expect it will be tested next week.

    [USD, JPY]
    USD-JPY opened near 101.45, and moved up to 101.67 intra day highs after the better U.S. housing data, on the back of some stability on Wall Street, and slightly firmer Treasury yields. Offers are still in place at 102.00, though focus remains on the 101.20 level, representing the March low, which could come into view quickly should risk appetite remain low.

    [GBP, USD]
    Cable rallied out of 1.6795 at the N.Y. open, peaking at 1.6841 at mid-morning in uninspired trade. The market had clearly got ahead of itself with regard to BoE tightening expectations this past week, and we may have seen the highs in cable for the time being.

    [USD, CHF]
    EUR-CHF has re-established a sideways direction anchored around 1.2200, having recovered from a recent foray to the mid-121s. The cycle low of 1.2104 and 1.2100 are key support levels. The threat of SNB intervention into its 1.2000 limit peg is helping to deter franc buying to some extent.

    [USD, CAD]
    USD-CAD trade was less than inspiring, with the pairing held to a 1.0888 to 1.0867 range since Thursday's North American close. Corporate bids remain in pace at 1.0850, while fund offers seen from 1.0910 yesterday, have reportedly been moved to 1.0900. Following the better U.S. housing starts data, the pairing moved up to session highs before falling back toward 1.0870.

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