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By XE Market Analysis November 4, 2013 2:19 pm
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    XE Market Analysis: Asia - Nov 04, 2013

    The dollar traded on an easier footing versus the euro in N.Y. on Monday, after it registered fresh trend highs in thin Asia trade. Asian participants fished for stops after last week's big move out of EUR-USD longs amid renewed talk of Fed taper and ECB rate cut speculation following weaker than expected Eurozone CPI data. EUR-USD spent much of its time in a narrow band over 1.3500, while USD-JPY traded sideways around 98.60. On the economic front, August and September factory data came in near expectations, and had little impact on trade.

    [EUR, USD]
    EUR-USD maintained altitude over 1.3500, through much of the session, though offers from 1.3520 stymied further gains. Some short covering may come into play ahead of the ECB meeting, though short term accounts are expected to fade moves into 1.3525 initially and then into 1.3540-50. We look for downside to be limited to near 1.3450 near term.

    [USD, JPY]
    USD-JPY maintained a narrow trading range through the session. It struggled to sustain movement over 98.70 since the N.Y. open and edged a touch lower in very slow trade. There are a lot of large strikes rolling off in the next two sessions between 99.00 and 100.00 and these should cap, along with outstanding option barriers that are live until late November.

    [GBP, USD]
    Cable consolidated European morning gains, leaving it just ahead of 1.5950. A better than expected U.K. construction PMI reading and a slight dollar correction lifted Cable through 1.5975. It stalled into 1.5980, where short term offers have been placed ahead of resistance between 1.5990 and 1.6010 on the hourly chart.

    [USD, CHF]
    CHF maintained a mixed tone due to contrasting USD and EUR flows. A push out EUR long positions late last week left EUR-CHF over 1.2300 at the European open, but this has been offset to a degree by USD-CHF's supportive tone. During the Asian session it moved up to 0.9150 in thin trade and then edged back to 0.9115 as the dollar corrected in Europe. The CHF may see buying interest on dips against the EUR in the very near-term, with ECB rate cut expectations picking up last week.

    [USD, CAD]
    USD-CAD recovered from its lows, moving over 1.0425, after finding very good buying interest under the figure. Corporate names were again mentioned on the bid, with the interest seen layered down to 1.0380. On the topside, offers are seen in place from 1.0440, and helped to cap gains through the session.

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