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By XE Market Analysis January 24, 2014 8:06 am
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    XE Market Analysis: North America - Jan 24, 2014

    The risk-off theme heated up, which in the forex market was reflected by continued broad USD losses along with fresh lows in the risk barometer crosses of AUD-CHF and AUD-JPY, the former of which made the lowest level since August 2012 and the latter making a new low in the period since last September. USD-JPY dove a low of 102.00, which losses having accelerated on the break of the Jan-13 low of 102.85 as stop orders took their effect. EUR-USD spiked through 1.3700 to a three-week peak of 1.3739. Cable U-turn after rallying above 1.6650, meeting solid selling in the 1.6660-70 area and subsequently dropping below 1.6600 following dovish BoE-speak. The AUD dove to a fresh three-and-a-half year low of 0.8660 following RBA-speak from member Ridout, who said that a AUD-USD exchange rate of "around 0.80" would be a "fair deal," along with news that China may issue alert on credit risks in its coal industry.

    [EUR, USD]
    EUR-USD spiked through 1.3700 to a three-week peak of 1.3739 as the USD continued to take it on the chin amid the broader risk-off theme in global markets, itself driven by an emerging market cascade following weak a China PMI flash estimate for January. Thursday's stronger than expected Eurozone PMI also helped set the euro up on a better footing. Resistance is marked at 1.3750-60 ahead of 1.3800.

    [USD, JPY]
    USD-JPY dove a low of 102.00, which losses having accelerated on the break of the Jan-13 low of 102.85 as stop orders took their effect. Falling stocks markets and general risk aversion in financial markets has scene the yen rally, which fits the usual pattern. Sustained risk-aversion in markets could drive the yen still higher, despite the BoJ's ultra easy policy settings. USD-JPY resistance is pegged at 102.85, which was the Jan-13 low, support at 102.00.

    [GBP, USD]
    Cable has seen volatile trade, U-turning lower after rallying above 1.6650, meeting solid selling in the 1.6660-70 area and subsequently dropping below 1.6600 following dovish BoE-speak. BoE MPC's Weale rejected the idea of lowering the jobless target to 6.5% from the current self-prescribed 7.0%, which his now within a whisker's reach after the much steeper than anticipated decline in the jobless rate to 7.1%. This follows the reminder from BoE Govorner Carney yesterday that other factors will be taken into account, which we know from the bank's forward policy framework are inflation and financial stability criteria. BoE member Fisher, along with the minutes to the early January MPC meeting, have also downplayed the drop in jobless as average pay remains negative and inflation pressures are declining. Last month CPI fell to the BoE's mandated 2.0% target for the first time since 2009.

    [USD, CHF]
    EUR-CHF dove to the mid-1.22s, the lowest levels in three weeks. The risk-off environment has supported the safe-haven Swiss, with prevailing levels still comfortably above the SNB 'danger levels' -- levels there the central bank may think about intervening in defence of its 1.2000 limit. Support is pegged at 1.2225and 1.2210. Resistance comes in at 1.2300 and at 1.2317-20, which encompasses the 200-day simple moving average.

    [USD, CAD]
    USD-CAD reportedly ran into very solid bids under 1.1100 over the last day, with corporate and option types seen stepping in. Many buyers likely missed the boat after the BoC on Wednesday, and took quick advantage of the moderate dip to step back in. The first area of resistance is now seen at 1.1175. In the bigger picture, the 1.1675 level is being noted, the 62% retracement of the 2009 to mid-2011 plunge.

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