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By XE Market Analysis September 6, 2013 2:31 pm
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    XE Market Analysis: Asia - Sep 06, 2013

    The headline August NFP outcome was fairly near expectations at 169k (median 177k), though downwardly revised July and June numbers weighed sentiment overall. The dollar sank with yields. though we still expect the Fed to follow through with a modest taper on Sep-18 that won't materially alter the easy policy setting. The dollar stayed down in afternoon trade, despite prospects for a Sep Fed taper. The FX market appeared to be positioned for a better NFP outcome, while the downward back revisions didn't help the cause. We look for USD dip buying to step in at some point, though into the weekend, activity dried up early.

    [EUR, USD]
    EUR-USD rallied from near 1.3110 to 1.3180 in the immediate aftermath of the jobs report, before pulling briefly back to 1.3125, perhaps as the market came to the conclusion Sep Fed taper was still in play. The pairing was bid up again however, as stocks turned negative. EUR-USD touched intra day highs of 1.3189, where it reportedly ran into sellers into the figure. Middle east name were spotted on the offer, while option related selling was noted. Stops are likely in place over the figure, though spec accounts may be willing to fade the rally on moved toward 1.3220-40.

    [USD, JPY]
    USD-JPY slumped to 98.80 from 99.90 after the U.S. employment report, though recovered marginally, before heading lower again. The pairing based at 98.54 at mid morning before stabilizing, and eventually heading over 99.20. Profit taking had picked up overnight, perhaps as the market had stretched longs over the 100 mark. Today's sell-off may have cleared enough longs out of the market to see a retest of recent highs early next week. The balance of risk in the near-term is still skewed to higher levels as the dollar looks set to extend the underlying bid.

    [GBP, USD]
    Cable ended the London session above 1.5600 as dollar losses over the NFP release provided the backdrop for an afternoon recovery. Upward momentum was still limited over 1.5650 though. A kneejerk run on 1.5680 ran out of steam and subsequent movement over 1.5650 was restricted as EUR-GBP recovered from under 0.8400 in line with EUR-USD. GBP dip buying should continue next week amid improving U.K. fundamentals. Wednesday's U.K. employment release will be key event given the BoE's forward guidance. Meanwhile, the latest estimates from think tank NIESR backed recent forecasts for a pick up in Q3 GDP.

    [USD, CHF]
    CHF gained on safety plays amid comments from Russian President Putin. His support for Syria saw EUR-CHF fall quickly from 1.2380 to 1.2325 as trailing stops gave way at 1.2350, and USD-CHF fell from 0.9430 to 0.9350, where natural buyers have stepped back in. The swissy action was mirrored via the yen, which raced higher on deleveraging and tipped USD-JPY to intra-day lows near 98.50 from over 99.00.

    [USD, CAD]
    USD-CAD fell to 1.0388 from 1.0440 after the combination of a strong Canadian jobs report, and a nearly in-line U.S. report. Sell stops were triggered at 1.0430 and again at 1.0400, though corporate bidding interest was noted under the figure. The pairing later recorded 1.0382 lows, despite the softer Ivey PMI numbers. USD-CAD made its way back to 1.0400 into the close.

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