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By XE Market Analysis September 3, 2013 2:35 pm
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    XE Market Analysis: Asia - Sep 03, 2013

    The dollar posted modest gains following a much better ISM outcome, along with firmer construction spending data, though it gave back its post-data gains versus the euro and yen, largely as Syria strikes were supported by congressional leaders on both sides of the aisle. Stocks didn't like the Syria news, which weighed on the dollar as well. Overall though, EUR-USD and USD-JPY ranges were relatively narrow, with the former bouncing to 1,.3165 from 1.3139 lows, and the latter easing under 99.40 from 99.85. Wednesday's calendar brings July trade data, while north of the border, the BoC will announce policy.

    [EUR, USD]
    EUR-USD found buyers ahead of long term moving averages. The 200-dma at 1.3145 and the 100-dma at 1.3135 provided a prop for the EUR since the latter part of July. If these levels give way then more stale EUR longs could exit, though on Tuesday, the low was just under 1.3140. The dollar popped higher after the stronger ISM and construction spending outcomes, taking EUR-USD to intra day lows of 1.3140, but the pairing bounced over 1.3170 after news the U.S. Congress may authorize Syria strikes. The EUR has struggled to capitalize on economic data and the recent improvement in risk appetite.

    [USD, JPY]
    USD-JPY bounced to 99.86 high from near 99.40 after better U.S. ISM data. The pairing stumbled ahead of the psych 100.00 level, with a lot of selling interest reported at the figure. News of bipartisan agreement on Syria strikes in the U.S. Congress put a damper on the dollar from there, eventually taking USD-JPY back under 99.25. Trade was light overall however, and good support is seen into 99.00.

    [GBP, USD]
    Cable is tied to option expiry territory at 1.5550. A move over 1.5600 during the European morning was brief. Offers emerged ahead from 1.5605-10 and it reverted to lower levels due to underlying dollar strength. EUR-GBP bargain hunting re-emerged after 0.8450 barriers were extinguished. It traded at its weakest levels since May-21 and drew in corporate hedging. We anticipate GBP movement to remain narrow until tomorrow's U.K. services sector PMI, which will complete the current picture on the U.K. economy.

    [USD, CHF]
    USD-CHF upside movement may slow, with several dollar pairings close to key levels. It has traded higher since the latter part of part of last week as the immediate threat of military action against Syria receded and PMI data picked up around the globe. EUR-USD is hanging over long-term moving averages, which will be pivotal ahead of Thursday's ECB meet and Friday's NFP reading and USD-JPY is experiencing a battle ahead of the psychological 100.00 level. These pairings are more likely to drive USD-CHF rather than direct flows due to a lack of wholesale swissy selling amid near-term event/data risks, which are capping EUR-CHF ahead of 1.2350.

    [USD, CAD]
    USD-CAD moved to 1.0510 lows, after opening near 1.0540. Trade was quiet and rangebound, with bids in place at 1.0500, and a band of offers from 1.0560. The better U.S. ISM data had little impact on the CAD, though after being supported by better risk levels in the morning, the CAD slipped back some after news that bipartisan congressional support may be in pace for Syria strikes. This dented stocks and risk levels, taking USD-CAD back to 1.0550.

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