Daily Forex Overview

Previous session overview

On Thursday, the dollar rallied across the board, rebounding from sharp losses that accumulated since the start of the week, on a surge in U.S. stocks when crude oil futures dove more than USD5 on the day.

In comments in an interview, ECB President Jean-Claude Trichet said there is a risk of a wage-price spiral developing in the euro zone.

The euro also capitalized against the yen on the bounce to market sentiment. EURUSD bulls and bears are locked in a tight battle as hawkish comments from ECB officials prevent the currency pair from succumbing to the recovery in the US dollar. EURUSD traded with a low of 1.5782 and a high of 1.5894 before closing the day at 1.5851.

Slowing growth out of the UK is keeping the British pound under pressure, though it remains near its recent peak against the USD. GBPUSD traded with a low of 1.9949 and a high of 2.0073 before closing the day at 2.0020.

As JPY is sensitive on equities, USDJPY barely paused as it rallied from 105.35 to even poke its head above 107.00 before easing to 106.70 in late NY. USDJPY traded with a low of 104.75 and a high of 107.11 before closing the day around 106.25.

The Australian dollar was weaker late Friday as the greenback forged ahead in its recovery and investors in the commodity currency took a breather after two days of very volatile trade.

Market expectation

The euro is mixed Friday after statements from the president of the European Central Bank deterred buyers.

GBPUSD now is falling, possibly on reaction of Financial Times story that UK Treasury officials want to revise PM Brown's rules on spending and borrowing.

JPY rises a little as players react to BOJ Governor Shirakawa's comment. But still, few would have expected a shift in BOJ rate policy anytime soon and comments don't in anyway indicate a move is imminent. USD/JPY drifts down to 106.20, and may fall to 105.80. EUR/JPY at 168.40 and may fall to 168.00.

AUD traders will look through high CPI. Lower than expected result could set stronger sell tone for AUDUSD. And analysts have firmed up their calls for the Australian dollar to hit parity with the U.S. dollar in coming months. Market participants are now pricing in a 40% chance of an RBA rate decrease in the next 12 months.

Most important events of the day