Daily Forex Overview

Previous session overview

The US dollar gained ground against most major currencies on Friday, as risk aversion resumed among investors and after worldwide equity share prices continued their decline amid fears of a possible global recession.

EURUSD was very subdued, mostly bumping around 1.2680 - 1.2800, closing the week at 1.2725.

The British pound continues to slump toward 1.60 amidst demand for dollars and in anticipation of the Bank of England's monetary policy decision next week.

The Japanese yen steadied versus the US dollar and strengthened against other major currencies as risk aversion returned to the markets. As expected, the Bank of Japan cut interest rates, however only by 20 basis points which was not in line with market expectations.

The Canadian dollar weakened versus the US dollar on Friday, hurt as equity markets fell due to renewed fears of global recession.

The Australian dollar strengthened in Asian trade late Monday as an easing of market jitters helped traders move away from safe-haven investments and back into higher-yielding assets. The improvement in market confidence has weighed on interest rate instruments, with the Australian bond futures contracts dropping sharply.

Market expectation

Pound closed the week in NY around USD1.6080, with overnight dealing then seeing a push up from early lows at USD1.6075. A strong rally in sterling-yen aided the move as cable rallied aggressively to USD1.6310 after a spike through USD1.6200. With the yen crosses extending gains into European dealing (sterling-yen moving on to a JPY163 handle), cable was able to accelerate to fresh highs for the day just shy of USD1.6400, currently holding back around USD1.6360. Stops noted through USD1.6400 now, with a break set to expose Friday's peak in the USD1.6460 area. Small demand comes in at USD1.6320/25 and USD1.6220/25, traders say.

The euro is rallying Monday against the dollar and yen, after losing ground Friday. Dealers reported some good euro buy orders at USD1.2800 and up, and attributed part of the rally to the light trading with Japan closed for a holiday.

Analysts said Monday that the dollar remains under moderate pressure against the euro ahead of a week packed with U.S. data releases expected to highlight the poor health of the world's largest economy.

Today the economic calendar has a few releases from Europe, with German retail sales which dropped again unexpectedly pushing euro to new daily lows below 1.27. The economic data out of Europe continue to disappoint and until we see some kind of positive numbers, the euro won't have the chance to get bid. Also later today we have releases out of US, with consumer spending and income together with consumer confidence.

Most important events of the day