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Daily Forex Overview

Mon, Jul 14 2008, 08:18 GMT
by Raivis Zile

Dukascopy Swiss FX Group

Previous session overview

On Friday, the euro almost hit a record high against the dollar on worries about mortgage giants Fannie Mae and Freddie Mac. A sharp fall in U.S. stocks, along with a fresh record high for crude oil futures on the New York Mercantile Exchange, sent the euro to an 11-week high of USD1.5949 - less than a cent from its record peak of USD1.6020.

The Euro made solid gains against the dollar as banking concerns weighed breaking above 1.5900 as Oil and Gold surged higher. EURUSD traded with a low of 1.5765 and a high of 1.5949 before closing the day at 1.5936.

The tension on the credit markets and the spike higher in the oil price hammered USDJPY. The pair dropped from levels above 107.00 to test bids below 106.00 at the open of the US stock markets. However, later in the session, the pressure already eased. USDJPY closed the day at 106.27.

Pound made a solid gain against the USD but weakened against the EUR breaking through the key 0.8000. The market continues to debate whether the next movement from the BoE will be a rate hike to counter inflation or a rate cut to combat economic weakness. GBPUSD traded with a low of 1.9755 and a high of 1.9958 before closing the day at 1.9870.

The Canadian dollar was little changed against the U.S. dollar, after a weak domestic jobs report all but cemented expectations that the Bank of Canada will leave interest rates steady next week.

The Australian dollar held steady on Friday, finally breaking through the 0.97 level, helped by strength in commodity prices, though growing uncertainty about the U.S. financial system left investors hesitant about pushing it any higher.

Market expectation

EURCHF failed to close above its 200-day moving average, but other technical factors indicate upside momentum remains in place. Close above 1.6227 is still required to lead to further gains to initially 1.6300.

USDCHF has taken a hit from ongoing uncertainty on financial markets, and parity is back again. And analysts see pair at 1.09 in 3Q.

EURJPY falling as investors keep selling to lock in profits after pair hit record high of 169.69. European investors will likely sell the euro against the dollar in anticipation that U.S.' attempts to help GSEs will help the dollar bounce back, and such euro sales could hurt the EURJPY. For EURJPY resistance is at 169.50 for now.

Traders will focus on economic reports due out next week including US PPI, retail sales, CPI, real earnings, capacity utilization, industrial production, Philadelphia Fed survey and housing starts.

Most important events of the day

Published on  Mon, Jul 14 2008, 08:23 GMT