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By XE Market Analysis November 14, 2013 2:00 pm
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    XE Market Analysis: Asia - Nov 14, 2013

    Senate confirmation hearings for Fed chair nominee Yellen were the focal point of Thursday's N.Y. session, where she largely hardened her dovish leanings. Wall Street responded with a modest rally, while Treasury yields and the dollar pulled back some. Ahead of the hearings, U.S. data was marginally disappointing, as weekly jobless claims were a bit higher than forecasts, Q3 productivity softer, and the September trade deficit wider than expected. EUR-USD opened near 1.3440, and eventually made its way to highs near 1.3490. USD-JPY meanwhile, traded a narrow band on either side of 100.00.

    [EUR, USD]
    EUR-USD probed the downside ahead of the N.Y. open, though interest to rebalance excessive short positions put a floor in place, along with Yellen's prepared testimony ahead of today's confirmation hearing. Support ahead of 1.3400 fueled a move back toward 1.3450, where it spent a large part of the European morning. The EUR upside is still being limited by the ECB's policy stance, a bearish technical backdrop and option related selling. On the options front, strikes rolled off at 1.3430, 1.3450 and 1.3500 in average size. The dollar slowly slipped further as Yellen's Q&A continued. Treasury yields have moved a touch lower, adding some weight to the greenback, while dovish commentary from the Fed chair nominee didn't helped either. EUR-USD moved to session highs near 1.3490.

    [USD, JPY]
    USD-JPY struggled over 100.00, with a variety of selling interest noted from the level. Option backed offers remained in place, though there was little in the way of unusual price action when some rolled off at 10:00 EST. In addition, the usual suspects of Japanese exporters were reportedly parked on the offer up to 100.25. As a result, modest moves over 100.00 may provide a good level to book some profits on long positions.

    [GBP, USD]
    GBP posted a decent rally on real money account demand. There was no lasting effect from the U.K. retail sales drop, with BoE policy encouraging GBP inflows since yesterday's Inflation Report. Cable traded out of 1.5990 to 1.6100 after clearing a series of moving averages just above 1.6000. EUR-GBP also saw good direct flows and moved through bids at 0.8370-80. Meanwhile, GBP-JPY was buoyed by Japanese demand for Gilts and the rise in risk asset, leaving it is nearly three figures higher on the session close to 161.00.

    [USD, CHF]
    CHF remained narrowly mixed amid the recent contrasting flows via EUR and USD. USD-CHF is marking time near 0.9170 after it pulled back from last week's 0.9250 peak to 0.9155-60 on Tuesday. The impact on EUR-CHF was muted as EUR-USD moved higher. The dollar is still expected to trade on the firmer side amid a rise in Fed taper expectations, though a period of sideways movement may influence in the near-term before trending higher again. The SNB indicated that it would monitor the impact from the ECB rate cut. However, so far EUR-CHF has been well supported by local names into 1.2300 and below, which will offer encouragement to the SNB.

    [USD, CAD]
    USD-CAD did not react much to the mix of data, where the Canadian trade deficit narrowed, U.S. deficit pushed out, and U.S. jobless claims were a bit higher than forecasts. USD-CAD remained in a narrow trading band over 1.0490, after easing into 1.0440 in early Asia. Sellers were in place from 1.0500-10, which slowed upside momentum until mid-morning. Later, the pairing broke a bit higher, peaking at 1.0525. Offers from 1.0500-10 were chipped away, though more were seen from 1.0520. Trendline resistance comes in near 1.0550, which may be looked at as a near term target, though a dovish Yellen put weight on the greenback in late morning trade, resulting in USD-CAD easing back under 1.0480.

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