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Daily Forex Overview

Tue, Nov 18 2008, 08:26 GMT
by Raivis Zile

Dukascopy Swiss FX Group

Previous session overview

On Monday, the dollar was range-bound against the euro and the yen as a mixed bag of U.S. economic data helped keep a lid on trading action.

On Monday, the global context for EURUSD trading was little changed. In Europe stocks opened reasonably well with some small gains despite the poor close in the US on Friday evening. This caused EURUSD to go higher too and the pair tested offers in the 1.27 area during the European morning session. EURUSD closed the session at 1.2650 compared to 1.2605 on Friday.

The Japanese yen has traded very choppily lately, but remains below its October 24 highs where the low-yielding currency ran into critical resistance versus most of the majors. The pair was up and down in a 96.00/97.50 trading range and closed the session at 96.43, compared to 97.14 on Friday.

The Australian dollar was marginally softer in late Asian trade Tuesday as regional equities markets weakened on a continued darkening of the global economic outlook. The central bank minutes Tuesday, while bearish on the domestic and global economic outlook, provided little to support traders' expectations for the RBA to cut the cash rate one percentage point at its Dec. 2 policy meeting.

Market expectation

EURUSD dips to intraday low of 1.2580 in part due to downward pressures from sliding EURGBP, which tripped some stop-loss sell-orders, say traders. Little risk of big fall for EURUSD for now as there's nothing new that should fuel the euro's decline further. Traders adds that EURUSD also dragged down by EURJPY, which came under selling pressure after Nikkei widened losses in last minutes.

Analysts said that U.S. stock markets, which ended lower Monday, could be in store for more declines in the days ahead, which might spark another rally in the dollar. Investors may steer away from riskier bets and buy the U.S. currency as a safe harbor. Also participants are waiting for more guidance from central bankers, other markets and economic data.

AUDUSD risks still firmly to downside, expected to head toward 0.54 by end of next year, bank strategists inform. Lots of bad news already priced into AUD but further weakness in stocks can add further downward pressure to AUDUSD.

Today, the euro zone eco calendar is empty, while the ECB speakers are unlikely to break new ground.

Most important events of the day

Published on  Tue, Nov 18 2008, 08:29 GMT