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Daily Forex Overview

Thu, Aug 7 2008, 07:29 GMT
by Raivis Zile

Dukascopy Swiss FX Group

during the summer break there will be no afternoon report from 08.08 - 22.08, we will start publication from august 25

Previous session overview

The US dollar gained across the majors on Wednesday as the FOMC's policy statement failed to quell speculation of 75bps worth of rate hikes over the next 12 months.

On Wednesday, the dollar hit a seven-month high against the yen and notched big gains against a host of other currencies as lower oil prices and weak European data cheered the U.S. currency buyers.

The euro continued its descent on Wednesday, getting a little help from the release of German factory orders, which plunged 2.9 percent during the month of June.

The British pound plummeted nearly 100 points on Wednesday as traders continue to bet on nearly 50bps worth of rate cuts within the next year, according to overnight index swaps.

The Japanese yen weakened against the dollar and euro as stronger overseas equity markets boosted investor appetite for riskier assets.

The Canadian dollar fell further against the dollar as investors continue to leave the commodity-linked currency.

The Australian dollar continued its downwards spiral in Asia Thursday, as a broadly stronger U.S. dollar and ongoing speculation that the Reserve Bank of Australia may soon cut rates capped any gains. Forecast-beating July employment data, with 10,900 jobs created compared with an expected 5,000, also failed to reverse the downward momentum for the local unit.

Market expectation

The euro is mixed Thursday, trying to find direction in narrow ranges against the dollar and yen pending the ECB rate decision and statement later.

Currency markets now will turn their focus to the European Central Bank's interest rate decision Thursday. Markets are expecting the euro zone's central bank to leave rates on hold at 4.25% despite rising inflation, as the economy seems to be slowing considerably.

The euro may resume its slide toward the psychologically important USD1.5300 line versus the dollar if the European Central Bank signals greater worry about the euro-zone economy at a policy meeting later in the global day.

Looking ahead, Weekly Jobless Claims are seen down to 423K from 448K last week. June Pending Homes Sales expected down to 1%.

Most important events of the day

Published on  Fri, Aug 8 2008, 09:06 GMT