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Daily Forex Overview

Fri, Nov 28 2008, 08:44 GMT
by Raivis Zile

Dukascopy Swiss FX Group

Previous session overview

The U.S. dollar ended little changed against the yen and the euro Thursday as the Thanksgiving holiday in the U.S. put a temporary halt to the recent frenetic activity in global foreign exchange markets.

The Euro kept to inside yesterday's range as the market consolidated the move higher and waited for more direction. As the volatility decreases, there is potential for a retracement as risk aversion should also come off. EURUSD lingered in a relative tight sideways range of 1.2860 to 1.2960 to take the extremes, closing at 1.2904, up 24 ticks from Wednesday's close.

Bank of England Monetary Policy Committee member Besley reported policymakers must prevent banks from overreacting when they scale back lending during the economic pullback. GBPUSD traded with a low of 1.5316 and a high of 1.5511 before closing the day at 1.5410.

The yen appreciated against the U.S. dollar yesterday as the greenback tested bids around the JPY95.00 figure and was capped around the JPY95.70 level. USDJPY traded essentially sideways, closing down about half a yen at 95.19. Intra-day, the pair slid during the Asian session, only to slow move higher again in the European session.

The Australian dollar continued to benefit from easing risk aversion in Asia Friday, nudging higher in thin volumes, while bond futures reclaimed some lost ground. The immediate focus for the local currency is squarely on a gargantuan set of domestic data and the Reserve Bank of Australia's policy board meeting, all scheduled for next week.

Market expectation

The euro is likely to continue to tread water against the dollar and yen in thin trade Friday.

In the major currencies, the closure of trading desks in the U.S. for the holiday drained away whatever liquidity had remained in currency markets, analysts said.

Euro-sterling touched a high at stg0.8393, currently holding around stg0.8387. Support noted at stg0.8370, stronger around stg0.8350. Resistance is at stg0.8395/00.

Cable offers seen placed to USD1.5450, more at USD1.5470/80 ahead of Thursday's highs at USD1.5512, with interim interest expected to emerge around USD1.5500. Support noted between USD1.5405/395, more toward USD1.5380, with interest said to extend down to the overnight lows at USD1.5368.

Swiss name sales into early Sydney trade took EURUSD to an early session low of USD1.2880, with move running into decent demand interest placed at this level. Stronger demand into Europe took rate above this area, moving to USD1.2956 in recent trade. Resistance noted toward Thursday's highs at USD1.2968, with further offers noted toward USD1.2980. Support remains in place at USD1.2880, with interim interest beginning to emerge around USD1.2905/00.

While the U.S. is officially open for business Friday, trading in currency markets is expected to remain thin as many market participants take an additional day off.

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Published on  Fri, Nov 28 2008, 08:45 GMT