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Daily Forex Overview

Mon, Aug 25 2008, 07:55 GMT
by Raivis Zile

Dukascopy Swiss FX Group

Previous session overview

On Friday, the U.K. pound fell to a fresh two-year low against the dollar after U.K. economic growth rates hit their lowest level since 1992, signaling a looming recession. The dollar also climbed against the euro, the yen and the Swiss franc as risk appetites improved with rising U.S. stocks.

The Euro fell nearly 100 points due to broad US dollar strength and as Euro-zone industrial new orders fell for the second consecutive month in June. The euro moved lower against the U.S. dollar as the single currency tested bids around the USD 1.4790 level and was capped around the USD1.4910 level.

The British pound depreciated sharply against the U.S. dollar today as cable tested bids around the USD1.8545 level and was capped around the USD1.8795 level. Cable came within a few pips of testing a new multi-year low dating to October 2006. U.K. GDP data revealed the economy recorded zero per cent economic growth in Q2, its weakest showing since the early 1990s.

The Japanese yen ended Friday down versus most of the majors as traders sought out risky assets, as indicated by the nearly 2 percent surge in the Dow Jones Industrial Average and sell-offs in global government bonds, which are typically "safe haven" assets.

The Canadian dollar dipped after oil prices eased, but the currency is still trading around the USD1.0450 per US dollar level. Oil prices fell 1.1 percent to USD119.90 a barrel after gaining about 5 percent yesterday. Since Canada is a key exporter of oil, the Canadian currency is usually guided by oil price movements.

Market expectation

The market will be tuned in to U.S. Federal Reserve Chairman Ben Bernanke's speech today for more clues on interest rate and growth outlook.

The market is looking for a dip to buy dollars again after missing the big rally on July 22. The US currency rallied on Friday for this reason, but the sell-off in oil and the rally in stocks on rumors that Lehman will be bought underpinned. The immediate risk is on the upside and the only US economic report is existing home sales.

For this week, currency analysts said markets will be watching U.S. economic data to see whether consumer sentiment improves and whether second-quarter U.S. economic growth rates are revised lower.

U.K. market will be closed on Monday due to public holiday.

Most important events of the day

Published on  Mon, Aug 25 2008, 07:57 GMT