Daily Forex Overview

Previous session overview

On Monday, the dollar at first jumped against the euro as the U.S. banking crisis spread to Europe. But the greenback gave back some of its gains later in the day when U.S. lawmakers voted down a rescue plan for the financial sector.

Yet sharply lower oil prices also provided broad support for the dollar, with crude futures dipping to as low as USD95 a barrel from an intraday high of almost USD107.

The euro fell nearly 200 points during the European trading session as Euro-zone economic data was disappointing by nearly all measures. Indeed, the Bloomberg Retail Purchasing Managers' Index (PMI) for the Euro-zone slipped further to 46.2 in September from 47.7, marking the fourth consecutive month of contraction.

Sterling dropped from 1.8420 to a 10-day low of 1.7960 after the government nationalized the mortgage lending business of Bradford & Bingley, with the retail branches and deposits sold to Spanish bank Santander.

Japanese August Retail sales were +0.7%. USDJPY traded with a low of 105.03 and a high of 106.57 before closing the day around 106.05.

The Australian dollar lost ground against the U.S. currency and bond futures soared in Asia late Tuesday as the U.S. legislature's rejection of Treasury's economic rescue package sent a jolt of fear through financial markets.

Market expectation

USDJPY trading at JPY104.30, near intraday high of JPY104.49, supported by demand related to fiscal-half book closing, but topside likely limited to JPY104.80 through Europe hours, saying traders; support at day's low so far of JPY103.50.

EURUSD seen meeting resistance around USD1.4370, as rate attempts to recover from pullback lows of USD1.4345. A break above this level to open a move on toward USD1.4385 ahead of USD1.4400, traders suggests. Bids are at USD1.4340/30, with stops below.

The rejection of the U.S. bailout plan made players speculate that European financial firms may face severe financing conditions ahead, said dealers. Citing the economic outlook, traders added that there are many reasons to sell the euro now.

The dollar is higher in early London trading Tuesday, with government bonds and gold prices little changed, ahead of the opening of Europe's stock markets, which are expected to plunge again as business begins.

Most important events of the day