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Daily Forex Overview

Wed, Jul 16 2008, 07:56 GMT
by Raivis Zile

Dukascopy Swiss FX Group

Previous session overview

On Tuesday, the dollar stabilized and ended little changed versus the euro and hit a record low against the Euro as risk aversion continues to seep through the global markets.

Stock markets have sold off around the world on the fear that another financial market crisis could be right around the corner.

The euro shrugged off bad economic data from Germany, with the ZEW survey falling to a record low, rallying to a fresh all time high against the dollar above to 1.6038. But gains were short time as the greenback recovered by the New York session, pushing the single currency back toward the 1.59 level.

The British pound strengthened against the US dollar and Euro as consumer prices hit a record high. UK CPI rose 0.7% M/M and 3.8% Y/Y. The Sterling broke through resistance at 2.0000 level - surging to highs of 201.57. GBPUSD traded with a low of 1.9933 and a high of 2.0157 before closing the day at 2.0018.

USDJPY slipped to JPY104.16 in US trade Tuesday. Then rallied to JPY105.11 as the greenback found favor across the board and oil came off aggressively. Strong supply in euro-yen coming from a UK fund knocked the pair back down to JPY104.50.

The Australian dollar was slightly firmer late Wednesday having pulled back from a 25-year high after dovish statements from the Reserve Bank of Australia pared back initial gains made on the continued U.S. dollar rout.

Market expectation

Rising energy and food prices, together with increased import prices as sterling weakens against the euro, could push the U.K.'s annual rate of inflation above 5%.

USDCHF is aiming for parity once again with markets in disarray. CHF isn't the only currency that may be lifted in the current environment. And analysts see USDCHF at 1.09 in 3Q.

Australian currency remains at elevated levels and it is poised to make further gains with many analysts expecting it will stand one-for-one with the U.S. dollar in the near future. Analysts expect US$0.9730 to remain a key support level with US$0.98 likely to keep the currency capped.

U.S. industrial output data for June are later in the global day, with economists forecasting a 0.2% on-month rise following a 0.2% decline in the previous month.

Totally today expected more potentially market moves US data including consumer prices, industrial production, and the minutes from the last Fed meeting.

Most important events of the day

Published on  Wed, Jul 16 2008, 08:02 GMT