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By XE Market Analysis November 17, 2014 2:31 pm
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    XE Market Analysis: Asia - Nov 17, 2014

    The dollar was mostly firmer in N.Y. trade on Monday, despite the miss in industrial production data, softer yields, and a lower Wall Street. USD-JPY held the 116 handle through the session, though was capped by reported offers from 116.50. EUR-USD meanwhile, traversed the 1.2500 mark early, though later traded under 1.2450 following headlines from the ECB's Draghi. He said he expects inflation to remain low in the coming months, and blames lack of structural reforms on remaining economic downside risks. He also said the Bank is willing to take more unconventional measures, if needed. While nothing terrible new, the comments did remind the market of potential easing in the coming months. USD-CAD stayed over 1.1300 for much of the session on softer oil prices, while cable stuck near the bottom of the range between 1.5630-60.

    [EUR, USD]
    EUR-USD moved to session lows after the weaker U.S. industrial production outcome, likely as headlines from ECB's Draghi crossed the wires at nearly the same time as the data. He said he expects inflation to remain low in the coming months, and blames lack of structural reforms on remaining economic downside risks. He also said the Bank is willing to take more unconventional measures, if needed. EUR-USD later made 1.2445 lows, with the selling largely coming from Draghi's reminder to the markets that more stimulus could be in the cards in the coming months. Last Thursday's low of 1.2427 is seen as initial support, while a break there brings Friday's 1.2399 base into focus.

    [USD, JPY]
    USD-JPY held relatively steady over 116.00 since the N.Y. open, maintaining a firmer bias, though gains were capped into 116.50, where reportedly a band of sellers was noted. Dollar buying from leveraged funds was seen overnight under the 116.00 level, with this interest expected to continue on dips.

    [GBP, USD]
    Cable traded below the Asia-session low at 1.5663 in London, making a low of 1.5627. The move was driven by a broader bid in the dollar, with EUR-USD also trading lower and USD-JPY having recovered the 116 handle. Cable's 13-month low at 1.5593, made on Friday, has swung back into scope, though will have to wait until Tuesday at least, as the pairing idled between 1.5630-60 through the N.Y. session.

    [USD, CHF]
    EUR-CHF remains heavy after clocking a fresh 26-month low at 1.2011 on Friday -- the twelfth consecutive day the franc has edged out a fresh high against the euro. The threat of SNB intervention is high given the nearing proximity of the franc's cap at 1.2000. The SNB's resolve in any defence can be expected to be resolute. President Jordan said last week that the cap will remain in place for the "foreseeable" future as it is "essential" for preventing deflation.

    [USD, CAD]
    USD-CAD touched 1.1328 intra day highs, after basing just under 1.1270 in Asian trade. Softer oil prices, and weaker equities were again the main supportive factors, though offers in place from 1.1350 limited gains through the morning session. As WTI pared losses, and stocks turned higher however, USD-CAD eased back under 1.1300 in light afternoon trade.

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