• Home ::
• Fundamental ::
• Market View ::
• Daily Forex Overview

• Send
• Print
• Add To
• Rss

a1453222-c67a-4371-b714-fdb01125768c

0

0

Daily Forex Overview

Mon, Jun 9 2008, 08:08 GMT
by Raivis Zile

Dukascopy Swiss FX Group

Previous session overview

The dollar fell Friday on the sharpest increase in the US unemployment rate in 22 years, record high oil over USD139bbl added more pressure, tumbling stocks and heightened risk aversion just about finished the greenback off.

On Friday, EURUSD extended the sharp rebound that started on Thursday after the ECB press conference. A disappointing US payrolls report (especially the high unemployment rate did catch the eye) and a sharp spike higher in oil prices hammered the US currency. EURUSD was traded around 1.5600 going into the payrolls report, spiked higher to the 1.57 area upon the release and gradually trended higher to close the day at 1.5777.

The British pound rocketed higher on Friday thanks to broad based US dollar losses. In fact, the strength has very little to do with UK fundamentals, as nearly every economic indicator from the country over the past week has weakened.

The Japanese yen rose against the dollar after a weaker than expected US jobs report. In other news, losses from US subprime investments cost Japanese banks about USD8b. USDJPY closed the session at 104.92.

The Canadian dollar - which tends to show a strong correlation with oil - went little changed over the course of the day as USDCAD consolidated below 1.0200.

The Australian dollar was one of the only common dollars to benefit from Friday's surge in commodity prices, as crude oil futures rocketed more than USD10 higher to touch a record high of USD139.12/bbl.

Market expectation

JPY losses are because of Japanese currency falls to its lowest level against the EUR this year. With both the Fed and the ECB putting fighting inflation back at the top of their agendas, renewed interest in carry trades is likely - leaving the JPY being sold against higher-yielding currencies.

Analysts expect the euro to drift between USD1.5650 and USD1.5900 this week, with an outside chance of the euro eclipsing the symbolic USD1.60 level. For the dollar against the yen, analysts see the greenback trading between JPY104.50 and JPY106.50.

There are some key U.S. economic data reports this week that could provide some needed relief to the dollar. These are led by May retail sales Thursday and consumer price inflation report Friday. But even if the U.S. data were to come out much better than expected - highly unlikely given the dismal U.S. employment report seen Friday - analysts say the dollar will likely remain weak.

Traders will closely be watching for comments by a handful of Fed officials at a Fed conference in Boston. Bernanke will be among those speaking.

On the ECB front, ECB's Trichet will speak this evening in Paris.

Today, the UK calendar contains the UK PPI data. We don't have a strong view on the outcome of the series. It will be interesting to see the market reaction on a higher than expected figure.

Most important events of the day

Published on  Mon, Jun 9 2008, 08:10 GMT