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Daily Forex Overview

Fri, Jun 27 2008, 07:30 GMT
by Raivis Zile

Dukascopy Swiss FX Group

Previous session overview

On Thursday, the dollar endured another day of broad declines on interest rate concerns, slumping U.S stocks and rising oil prices.

The Euro jumped to week highs as Oil Surged through USD140 and Gold rallied through the USD910 resistance. German May import Prices expected at 1.4% came in higher at 2.4%.EURUSD traded with a low of 1.5628 and a high of 1.5768 before closing the day at 1.5755. The euro also climbed to a record high at 169.47 versus the Japanese yen before tumbling to 168.01 due to risk aversion on the back of the slide in U.S. stock markets.

The British pound rallied for the third day in a row against the US dollar, hitting a 7 week high in the process. Cable climbed to 1.9895 after BOE Governor Mervyn King said in his testimony before a parliamentary committee that U.K. inflation will probably exceed 4 percent in the coming months.

The Japanese Yen made good gains across the board after heavy losses on stocks prompted safe haven flows. Many crosses were trading at yearly highs during the Asian session before US session falls. USDJPY traded with a low of 106.61 and a high of 108.19 before closing the day around 106.82.

Despite higher commodity prices, the Canadian, Australian and New Zealand dollars gave back some of their gains as high yielding currencies came under the pressure of falling risk appetite.

Market expectation

The focus in currency markets is now shifting toward the European Central Bank, which has virtually guaranteed to markets that it intends to raise interest rates next week after its policy meeting. Market participants will carefully listen to any comments from European officials and watch euro-zone indicators ahead of the today's meeting.

Analysts expect that unless the Fed corrects the market's perception that it is on hold for the foreseeable future, the EURUSD is poised to break above the 1.6000 barrier in search of fresh record highs in coming weeks. The euro's current historical high versus the greenback is at USD1.6020.

Financial markets and the oil price have increased demand for CHF. USDCHF will likely remain under pressure in the short term.

Later in the day, market participants will keep an eye on U.S. personal income numbers for May to gauge the state of the U.S. economy and the outlook for monetary policy.

USDJPY gains likely limited for now until further U.S. data. The dollar is well supported by buying from Japanese importers and institutional investors, but overall dollar sentiment is still facing downward.

Most important events of the day

Published on  Fri, Jun 27 2008, 07:33 GMT