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By XE Market Analysis April 24, 2014 3:09 am
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    XE Market Analysis: Europe - Apr 24, 2014

    The NZD was the sole mover in pre-Europe trade in Asia, rallying following a 25 bp rate hike by the RBNZ to 3.0%. The tightening was expected, but still elicited kiwi buying. NZD-USD logged a nine-day peak of 0.8636. USD-JPY didn't do much, opening in Tokyo around 102.45-50, dipping to a low of 102.24 and then settling around 102.35. Japan's Corporate Service Price Index for March came in at +0.7% y/y, as expected. Stock markets in Asia were generally lower today, following Wall Street's lead after unexpected weakness in U.S. home sales data on Wednesday, and the yen's perkiness seemed to match the currency's usual inverse correlation with equity market direction. Other currencies went nowhere but sideways. EUR-USD flat-lined around 1.3810-20. AUD-USD posted a 0.9282-0.9301 range. The Australian and New Zealand markets would down ahead of tomorrow's ANZAC Day public holiday.

    [EUR, USD]
    EUR-USD has continued to hold above 1.3800, though the euro stalled shy of early April highs following Wednesday's post-Eurozone PMI data rally. We continue to favour the downside in EUR-USD, partly as the ECB is desirous of a weaker euro. Technically, the rally from last's July 1.2042 low to the early March peak of 1.3966 is waning, as indicated by momentum indicators (particularly apparent on the weekly chart, where there is a strong divergence between underlying momentum and price trend). Resistance is marked at 1.3850-55, support at 1.3785 and 1.3765.

    [USD, JPY]
    USD-JPY has continued to oscillate in the 102s. The pair is lacking direction amid a broad sideways range, roughly contained within 100.00-105.00, which has been in place since early January. This stasis may persist for some time, though technical analysts will be marking this as a potential topping formation after the steep rally from levels around 75.0 that was seen during the second part of last year.

    [GBP, USD]
    Sterling has drifted lower in the wake of the BoE minutes release on Wednesday. The minutes didn't mark much of a departure from the already established dovish policy stance, which was a disappointment to us and some market participants who had been anticipating more of a decisively hawkish tone. Cable settled in the high 1.67s, down from the week's peak at 1.6839. We continue to target 1.7000 as we see the U.K. economic recovery holding strong into Q3. Support is marked at and 1.6762 and 1.6750.

    [USD, CHF]
    EUR-CHF has settled around 1.2200 again, having recovered from the one-month low of 1.2142 that was seen last on Monday. The cycle low of 1.2104 was left untested. While situation in the Ukraine remains a concern, and this is a potential supportive factor for the CHF, the threat of SNB intervention into its 1.2000 limit peg is helping to deter franc buying. SNB's Jordan said earlier in the month that Swiss inflation remains "very low," and that the franc cap would still be defended.

    [USD, CAD]
    USD-CAD has settled just above 1.1000 after recovering from the three-month low of 1.0858 that was seen on Apr-9. The failure to make weekly close under 1.0900-10 was disappointing to CAD bulls, to whom we would advise caution as the Fed vs BoC stance should remain broadly supportive of USD-CAD. Resistance is pegged at 1.1059-60 (50-day moving average) and 1.1100 (former pivot level). Support is marked at 1.0985 (20-day moving average) and 1.0942 (Apr-14 low).

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