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By XE Market Analysis October 28, 2013 1:42 pm
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    XE Market Analysis: Asia - Oct 28, 2013

    The dollar was mostly higher in N.Y. trade on Monday, though ranges were narrow, and overall activity light. U.S. data was mixed, as industrial production beat estimates, while pending home sales data dipped. The markets appeared to start gearing up for Wednesday's FOMC announcement, though the outcome may well be a non-event giving the slim-to-none prospects for Fed tapering at this meeting. EUR-USD slipped to 1.3775 from near 1.3800 at the open, though found good support into the level. USD-JPY meanwhile, traded a 20 point range inside of 97.60-80. We look for more consolidation into the Fed, though overall, the greenback still looks to be sold into modest rallies.

    [EUR, USD]
    The dollar maintained firmer levels after the better than expected industrial production reading boosted risk appetite and in-turn underpinned EUR-JPY. EUR-USD is still marking time near 1.3785 after it lost the 1.3800 handle into the N.Y. session as dollar buying accelerated. Later though, the big pending home sales miss clipped dollar gains. EUR made a brief attempt over 1.3790 from intra-day lows around 1.3775, eventually peaking over 1.3790 in light afternoon trade.

    [USD, JPY]
    USD-JPY moved up from 97.60 to near 97.80 in early trade. Tensions between Japan and China over the Senkaku Islands picked up late last week and this fed a small move higher today after comments from PM Abe, which suggested a harder stance from Japan. However, follow through on the USD-JPY upside was limited due to underlying dollar weakness and good corporate hedging on dollar strength. The JPY crosses were supported by positive risk appetite, which kept USD-JPY's downside in check.

    [GBP, USD]
    GBP-USD again failed to hold the 1.6200 handle, and slid into 1.6125 at the London close. U.S. industrial production data added liquidity on the way down, although GBP was a bit wobbly already since the weaker than expected U.K. CBI retail sales outcome earlier. The pairing has been supported into 1.6110 of late, though sell stops are seen building just under 1.6100.

    [USD, CHF]
    USD-CHF consolidated in quiet European trade, and did more of the same in N.Y. dealings. Last week it found support after 0.8900 barriers gave way. The bulk of the heavy lifting in USD-CHF from under 0.8900 came on Swiss name demand, which also enabled EUR-CHF to recover from the 1.2280 region back to 1.2350. The underlying dollar tone is still weak though and this may continue into Wednesday's FOMC decision, where a steady hand is anticipated. Given the USD-CHF influence on broader swissy movement further losses are likely to be limited in the early part of the week. Only a USD-CHF move back over 0.9000 would change the short-term picture.

    [USD, CAD]
    USD-CAD was steady overnight, trading inside a 1.0425-45 band through the London morning. Domestic names were sellers into the highs, with talk of corporate interest heard. Bids are in place from 1.0400, with sellers seen at 1.0470, and barrier options at 1.0500. The pairing found support into 1.0440 in light North American trade, though was unable to rally much over 1.0450.

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