Daily Forex Overview

Previous session overview

On Friday, the dollar rose against the euro due to a drop in U.S. stock markets and weak economic data.

U.S. retail sales fell by 2.8% in October, the biggest drop since records began in 1992 although the University of Michigan preliminary index of consumer sentiment unexpectedly rose to 57.9 this month from 57.6 in October.

The Euro was hurt by the confirmation of a Euro zone recession with Q3 GDP at -0.2%. EURUSD traded with a low of 1.2613 and a high of 1.2825 before closing the day at 1.2690.

Despite an afternoon push higher, the British pound ultimately ended the day lower versus the US dollar on Friday as many of the major currencies remain in consolidation mode amidst high volatility.

The Japanese yen has traded very choppily, but remains below its October 24 highs where the low-yielding currency ran into critical resistance versus most of the majors.

The Canadian dollar fell against the greenback as oil prices fell again overnight to USD57 a barrel after initially rallying yesterday.

The Australian dollar was weaker late Monday after a Group of 20 leaders' meeting at the weekend failed to provide specific commitments on coordinated stimulus and investors focused on an increasingly gloomy economic outlook.

Market expectation

Europe finds the USD marginally stronger than it left it late Friday after the weekend's G20 meeting ended with lengthy declarations but little else, so risk aversion picked up a tad. Data out of Japan confirmed the country had joined much of Europe and slipped into recession in the 3Q, which trimmed JPY gains, while sterling, which took a political pounding over the weekend, is once again on the slide.

EURCHF is set to remain under pressure and volatile. Continued weak economic data out of the euro zone will likely be a drag on the cross, several traders say.

Initial resistance for USDJPY is around 97.50 as massive selling orders being placed by Japan exporters.

Several analytics said Australian dollar is looking more at home in a US$0.60 to US$0.65 range than a US$0.65 to US$0.70, where it has largely traded over the past three weeks. Currency will be sold into any rallies as signs confirming economic deterioration in Australia and abroad continue to emerge.

Analysts will look towards any changes that may impact the international financial structure, which will continue to keep investors sidelined.

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