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By XE Market Analysis September 20, 2013 1:33 pm
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    XE Market Analysis: Asia - Sep 20, 2013

    The FX market was relatively quiet on Friday, as consolidation set in after the heavy volumes seen over the course of the week. The greenback perked up some through the N.Y. morning however, largely as short positions were covered into the weekend. There was nothing on the economic calendar to provide direction, and ranges were fairly narrow overall. EUR-USD found good support into 1.3500, while finding sellers at 1.3550, while USD-JPY meandered on either side of 99.50. Soft-ish Canadian inflation supported USD-CAD, though resistance was in place at 1.0300. Cable briefly gave back the 1.60 handle on profit taking.

    [EUR, USD]
    EUR-USD took a peek under 1.3510, though ran into reportedly good European based bids ahead of the figure. Friday's theme of reducing post-Fed positioning continued however, as the dollar has generally found a more bid tone through the morning. After bouncing again to 1.3540, the pairing touched 1.3499 lows ahead of the London close, though quickly turned back over 1.3530. Sell stops will likely be a factor under 1.3500, where the next layer of buying interest after that is at 1.3460.

    [USD, JPY]
    USD-JPY was hemmed in by option expiries rolling off at 10:00 EDT. Larger maturities were noted at 99.75 and 100.00, which hindered upside momentum. The USD-JPY rally is also suffering from exhaustion after it rallied sharply out of 97.75 since the Fed policy outcome. Restricting USD-JPY topside movement today was the lack of further gains in the JPY crosses. These have moved within a sideways trading pattern and reflect the narrow trading conditions across global equity markets and commodities. USD-JPY traded quietly from there into the close, moving largely between 99.35 and 99.65.

    [GBP, USD]
    GBP stops were filled on more position reduction. Cable moved down under 1.5990 as the psychological 1.6000 level gave way. A custodial name was a decent seller in the European morning over 1.6050 and this set the tone for N.Y. accounts digesting early remarks from Fed's Bullard. The Cable downturn provided momentum for EUR-GBP, which initially met offers on the way up from 0.8425 to 0.8450, and then experienced follow through demand from 0.8435 up to 0.8460. There was some divergence on the Cable chart, with some momentum studies rolling over, while we believe that market positioning may still be excessive and could dampen bulls at current levels.

    [USD, CHF]
    CHF gave no ground ahead of the weekend and enters the London close near the top of the range. It was one of the only currencies that did not experience profit taking. USD-CHF was suspended over 0.9100 throughout the session, leaving it close to post-Fed lows of 0.9100, while an underlying bid in CHF-JPY at multi-year highs over 109.00 left EUR-CHF just in front of the 200-dma at 1.2300. The weekend German election is a potential risk that saw Eurozo.ne spread widening today and may have kept the CHF elevated.

    [USD, CAD]
    USD-CAD revealed little reaction to the slightly cooler Canadian CPI data, though the pairing had been trending higher in overnight trade. The 1.0300 level provided initial resistance, with offers at the figure in place. Selling interest was said to be lined up to the 1.0350 area, so further upside could be a tough road for now. The pairing made a couple of attempts higher, peaking both times at 1.0301 before pulling back again.

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