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Daily Forex Overview

Mon, Mar 31 2008, 08:40 GMT
by Raivis Zile

Dukascopy Swiss FX Group

Previous session overview

On Friday, the euro held in a narrow range around $1.5800, staying near its all-time high as markets look to this week's release of an important U.S. jobs report.

Consumer spending increased 0.1%, the slowest pace in more than a year, signaling economic expansion may be grinding to a halt. In other news this morning, US stocks gained as energy companies rallied on higher natural gas prices.

The euro was boosted by inflationary pressure comments from a euro zone policy-maker, strengthening the view that the European Central Bank is unlikely to cut rates any time soon. Although, ECB officials have reiterated concerns that the strength of the euro could impact European economic growth. German consumer price inflation unexpectedly rose in March, giving support to the euro. The single currency rose from 1.5741 to 1.5840 on Friday, however, euro tumbled versus the Japanese yen from 158.35 to 156.56 on active cross-unwinding.

The pound in particular came under fire due to soft data and negative sentiment, dragging the other high-yield currencies lower to a degree. Reports in the Financial Times about rising mortgage rates and increasing concerns over the outlook for UK housing saw the pound start out weaker. GBPUSD traded with a low of 1.9883 and a high of 2.0090 before closing the day at 1.9932 in the New York session.

The Japanese yen remains within recent ranges against the greenback moving in line with the Swiss franc as both are funding currencies. USDJPY failed to sustain its daily gains trading with a low of 99.11 and a high of 100.40 before closing the day at 99.19 in the New York session.

The Canadian dollar was flat ahead of key domestic data due next week, namely the gross domestic product report on Monday and the March jobs data on Friday which could force the loonie out of its recent range.

The Australian dollar was softer late Monday, weighed down by negative moves on Wall Street and a shift away from high-yielding risk trades.

Market expectation

Some traders saying the dollar may yet have a chance to rebound on the payrolls and other data out this week.

Chicago PMI figures are made public on Monday with figures forecasted to come in at 46.5 for the month March, higher then the previous 44.5 and BoE Governor King is scheduled to speak on Monday.

According to several traders Euro Dollar trading will test 1.59 in the coming week. We can see levels of 1.60 up to 1.6150 in the first week of April.

JPY - Whether the up move in the JPY crosses continues will probably be dependent mostly on the perception on risk in the market. If we see equities trade higher and some positive news about credit markets, we could see traders pile back into carry trades.

Looking forward, it is a week packed with economic data including the Japanese quarterly Tankan report and US employment data on Friday. Expect some positioning in front of these important numbers which make for good, albeit choppy trading this week.

Most important events of the day

Published on  Mon, Mar 31 2008, 08:43 GMT