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By XE Market Analysis October 10, 2013 1:32 pm
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    XE Market Analysis: Asia - Oct 10, 2013

    The dollar firmed up some after fading briefly on the back of the bounce in jobless claims, though was met with fresh offers. There was some better news from Wahington, where hopes for at least a temporary debt limit increase was proposed by the GOP. Given the lack of seriousness among D.C. politicians though, it seemed a reasonable idea to fade the dollar's rally ahead of the afternoon GOP/Obama White House meeting. Should a settlement be forthcoming, there will be plenty of time to buy dollars. The greenback moved modestly lower through late morning, in very light dealings.

    [EUR, USD]
    EUR-USD eased back to 1.3505 after rallying briefly to 1.3546 on the back of the bounce in jobless claims, though was quickly met with fresh bids over the figure. The initial euro slippage was largely the result of hopes for a solution to the U.S. debt limit, though the market appeared to decide it may be a bit premature to long the buck. Especially given the track record of D.C. politicians. EUR-USD made its way back to 1.3545 in light trade.

    [USD, JPY]
    USD-JPY broke 98.00 on reported model fund demand after the dip into 97.60 on distorted jobless claims data. The pick up in risk appetite guided price action amid reports that House Republicans are considering a clean six-week debt limit bill, which was covered in the overnight press. BoJ Governor Kuroda pledged to do what is necessary to end deflation, but said it was too early to discuss addition BoJ measures. BoJ are expected to keep policy unchanged well into 2014 and will re-evaluate once the sales tax hike comes into effect. USD-JPY gains were traffic from real money offers that kicked in from 98.20.

    [GBP, USD]
    Cable topped out just over 1.5970 and headed back to 1.5930 on underlying dollar strength. GBP upside progress had been a struggle against a backdrop of bearish daily momentum and focus on developments in the U.S. An overhang of EUR-GBP offers from 0.8500 gave Cable a modicum of support, though short term funds are positioning for a break lower. Option barriers are reported at 1.5900 and this level has been in place since mid-September. However, hedging against the downside picked up recently and quite a number of short dated strikes went through since 1.6000 gave way yesterday. Cable later returned over 1.5970, though looked toppy under 1.6000.

    [USD, CHF]
    CHF is consolidating near the bottom of the range as market participants await a potential announcement from House Leader Boehner on a short term debt limit increase. USD-CHF and EUR-CHF both edged out highs of 0.9128 and 1.2128, respectively. Offers that were well flagged during the European morning kept gains in check for now. Setbacks have been very shallow so far as market participants hold out hope on a potential breakthrough in Washington. A move in the right direction could lift USD-CHF back on a 0.92 handle eventually, while the downside looks limited now between 0.9100 and 0.9060.

    [USD, CAD]
    The CAD got a bit of a boost from the improved expectations for political movement in the U.S., which took USD-CAD to session lows of 1.0372. From there though, downside was limited, as standing bids were noted from 1.0370. Momentum may pick up on a move through 1.0350 however (Wednesday lows), where 1.0300 could be targeted.

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