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Daily Forex Overview

Thu, Jan 8 2009, 08:15 GMT
by Raivis Zile

Dukascopy Swiss FX Group

Previous session overview

On Wednesday, the U.S. dollar retreated against the euro, the yen and the pound as concerns flared about the health of the U.S. economy. But the greenback managed to claw back some of its losses later as stock markets crumbled.

The greenback fell broadly against major currencies on Wednesday as steep job losses in the U.S. private sector reinforced investor expectations for a prolonged recession.

The EURUSD rallied to a 3-week high of USD1.3747 versus the dollar.

The British pound climbed to fresh 3-week highs against the euro as the single currency is besieged by rate cut expectations. GBPUSD traded with a low of 1.4806 and a high of 1.5281 before closing the day at 1.5100.

The Japanese Yen made solid gains against the Dollar as stocks slumped and fear entered the market. USDJPY traded with a low of 92.35 and a high of 94.14 before closing the day around 92.70.

The Canadian dollar fell against the USD today as oil and gold prices dropped.

The Australian dollar's familiar foe - risk aversion - roared back to life in Asia Thursday, sending the local unit almost 2 U.S. cents lower but beefing up demand for government bonds.

Market expectation

EURUSD broke back above USD1.3600, eventually able to extend recovery back to USD1.3660 into early European dealing, currently holding around USD1.3640. Offers remain in place between USD1.3665/80 ahead of USD1.3700/10. A break above this latter area can open a move on toward USD1.3750. Support seen back at USD1.3625/20, more toward USD1.3600, with stronger interest noted between USD1.3560/50, with talk of stops in place on a break below.

Traders said the greenback could rise further against its European rivals if the British central bank cuts its 2.0% policy rate more sharply than a generally expected half a percentage point. The same could also happen should the European Central Bank president suggest in his planned speech also later in the day that the bank could deliver a large rate cut when its members meet next Thursday, they said.

The slow return of liquidity to currency markets and expected sharp reminders about the poor health of the global economy mean the Australian dollar should continue to suffer in the near term, analysts said.

Most important events of the day

Published on  Thu, Jan 8 2009, 08:17 GMT