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Daily Forex Overview

Wed, Nov 19 2008, 08:31 GMT
by Raivis Zile

Dukascopy Swiss FX Group

Previous session overview

On Tuesday, the dollar rose as lower oil prices and volatile stock markets created risk aversion that sent investors scurrying for the perceived stability of the greenback.

The U.S. currency hit a one-year high against the Swiss franc, the U.K. pound dropped under the key USD1.50 level and the euro declined modestly against the dollar.

The single currency rose briefly to 1.2701 and then fell to 1.2566 on active cross selling in euro especially versus the Japanese yen. EURJPY retreated strongly from 123.89 to around 121.13 on the back of the initial selloff in U.S. stock markets.

The British pound fell against the dollar and euro with UK inflation data. Data showed that annual CPI eased to 4.5% in October from a 16-year high of 5.2% in September. The British pound retreated from 1.5093 to 1.4900 before rebounding in late U.S. session.

The Japanese yen stayed near 96-97 yen levels against the dollar. Early stock market weakness brought the pair close the 96.00 barrier around noon in Europe. There were again some stock market-driven gyrations later in the session. USDJPY closed the session at 97.03, compared to 96.43 on Monday.

The Canadian dollar recovered against the dollar today as crude oil prices nudged higher after hitting lows.

Thin trading conditions and another soft session for regional equity markets nudged the Australian dollar lower in Asia Wednesday, with further losses eyed offshore on the back of expected gloomy U.S. data. Also another bout of expected poor U.S. data, including residential building, will likely help push the Australian dollar lower, particularly against the Japanese Yen.

Market expectation

The euro and dollar are lower against the yen on Wednesday, while holding little changed against each other, as currencies continue to track movements in stock markets.

In the UK, the calendar is interesting with the CBI industrial trends report (November) and the Bank of England Minutes. Last month, the CBI report showed a sharp drop in total orders (-39 from -26). For this month, analysts expect a more modest drop after a slight improvement in the manufacturing PMI.

Analysts expect EURUSD to continue to develop within the barriers of this 1.2330/1.3297 consolidation pattern short-term. Whether the bottom of this range will continue to hold will be highly dependent on whether or not the major stock market indices will be able to avoid another down-leg below the recent lows.

Most important events of the day

Published on  Wed, Nov 19 2008, 08:33 GMT