Daily Forex Overview

Previous session overview

On Tuesday, the euro gained against the dollar when U.S. stocks recouped a portion of the day earlier losses.

Other risk-sensitive currency pairs also advanced as traders followed the up signal from equities markets. The dollar and euro both rose against the relatively safer, lower-yielding yen, while the U.K. pound rose against the dollar.

The Euro enjoyed a good bounce as US stocks rebounded and the market failed to break support at 1.2600. The pair set an intraday low at the start of European trading in the 1.2565 area as global markets still felt the fall-out from the sell-off on the US stock markets on Monday evening .Later a series of intraday buy stops were hit and the pair reached an intraday high in the 1.2765 area after the positive open of the US stock market.

The British pound gained against the dollar after yesterday's biggest 1 day fall since 1992. In economic news, Britain's construction sector fell at its fastest pace since records began 10 years ago. Construction PMI plummeted to 31.8 in November from 35.1.

The U.S. dollar declined to 92.63 against the Japanese yen before rebounding to 93.69 on cross selling in yen, however, the pair retreated in New York afternoon to end the day relatively unchanged at 93.18.

The Canadian dollar continued its 5 day weakening trend again the US dollar as oil prices fell to 3 ВЅ year lows.

The Australian dollar was firmer in late trading Wednesday, having clawed back some of its losses from earlier this week as a modest rise in U.S. and Australian equity markets indicated an improvement in risk appetite. Gross domestic product data issued Wednesday showed the Australian economy only just avoided recession in the third quarter.

Market expectation

The euro is little changed Wednesday, as investors wait for Thursday's European Central Bank meeting, which is expected to result in a healthy rate cut to battle recession.

EURGBP resting heavy on reported support to stg0.8515, though traders say rate has traded at stg0.8514. A clear below here can open a deeper move toward stg0.8500.

EURUSD back above USD1.2700 but reported offer in the area between USD1.2700/10 so far were able to cap move around USD1.2708. However, current tone traders said to remain firm. A break above USD1.2710 can open a move on toward USD1.2720 ahead of USD1.2740/50. Bids remain in place around early European low at USD1.2670.

For Pound bids remain in place at USD1.4950, a break below to open a deeper move toward USD1.4825/20 ahead of USD1.4805/795. Resistance noted at USD1.4900/10, more around the overnight high at USD1.4935, with offers said to extend toward USD1.4950. Above here and rate can push on toward USD1.4980.

Analysts say the Australian dollar, like other currencies, will need a significant macroeconomic or financial catalyst for it to break out of its recent range.

Traders are now looking to the ECB decision and trading is expected to be light before the event.

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