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By XE Market Analysis September 27, 2013 3:39 pm
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    XE Market Analysis: Asia - Sep 27, 2013

    The dollar faltered broadly in N.Y. trade on Friday, mostly the result of end of week, month and quarter conditions. There was talk of USD selling from fund accounts cleaning up their books for the quarter, which resulted in EUR-USD over 1.3560, USD-JPY under 98.25, and cable back over 1.6100. On the data front, personal income and consumption were in line with expectation, while the final Michigan sentiment print was a touch softer. Neither had much impact on the FX market. Treasury yields slipped back as did equities, largely the result of budget gridlock in Washington.

    [EUR, USD]
    EUR-USD firmed to session highs to near 1.3565 after softer sentiment print, though had been on the rise from the N.Y. open. Week, month, and quarter-end considerations appeared to be in play, which dented the dollar overall. The euro was unable to sustain the move over 1.3550 however, with some light option backed selling noted. The pairing eased its way under 1.3520 in light afternoon trade.

    [USD, JPY]
    USD-JPY lost further ground in N.Y. trade, with both the 50- and 200-day moving averages at 98.55 and 98.47, breached. The pairing moved under 98.27, the Wednesday low point, to 98.10, and sub-98.00 levels look to be next on the radar screen. Japan's core CPI rose 0.8% y/y in August, stronger than expected following the 0.7% core gain in July, the fourth straight month of annual growth, adding to the evidence that the BoJ's ongoing effort to end deflation is meeting with some success.

    [GBP, USD]
    GBP spiked as BoE Carney's said there is no case for more QE, a clear sign that the central bank its (finally) taking a less dovish stance, albeit within the context of its dovish forward guidance message. Sterling had taken a hit following the unexpected downward revision to y/y U.K. Q2 GDP data yesterday, though the data is backward looking and survey evidence are strongly pointing to an acceleration in GDP growth in Q3, to 1.0% q/q, we anticipate, from 0.7% in Q2. Cable touched 1.6138 in N.Y. trade, closing at its highs.

    [USD, CHF]
    The cross has been trending lower over the last two weeks, having fallen from 1.2400-plus levels, and took and extra step down in falling to a low of 1.2240. The mixed fortunes of global stock markets in recent sessions had helped support the safe-haven CHF. However, the speculative part of the market will be reluctant to establish short positions at sub-1.2300 levels in light of the persistent downside failures under this level since April. SNB's Jordan, earlier this week, reminded markets that the central bank remains fully committed to the 1.2000 limit peg, despite the backdrop of improving Swiss fundamentals.

    [USD, CAD]
    USD-CAD moved back to the bottom of its very narrow intra day range, idling into the 1.0300 level, before bouncing again. Bids continued to provide support at 1.0300, which protected the downside given the reportedly very light flows. The softer risk backdrop helped limit losses as well, though sell stops were noted at 1.0290, though never tested.

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