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Daily Forex Overview

Thu, Jul 2 2009, 08:45 GMT
by Raivis Zile

Dukascopy Swiss FX Group

Previous session overview

The dollar made slight gains against the euro and was steady against the yen in Asian trading Thursday, sticking to narrow ranges ahead of key U.S. jobs data later in the global day.

The dollar was trading at JPY96.60, just a single tick above JPY96.59 in late North American trading on Wednesday.

Earlier in the day, the U.K.'s Daily Telegraph newspaper reported that Russian banks may need to raise USD60 billion in fresh capital to cover an increasing number of bad loans, citing a Fitch Ratings analyst.

The Euro tested USD1.4000 but managed to shrug off heavy GBPUSD falls post GDP. EU Inflation fell 0.1% y/y in June. German Unemployment rises to 8.3% as expected. Euro found good buying interest as China purchasing mangers' index for June rose to 53.2 from 53.1 in May, consolidating the fourth month in a row above the watershed mark of 50.

The British pound fell against the dollar after the previous day's unexpectedly sharp downward revision to UK GDP continued to hamper the currency. The purchasing managers index rose to 47.0 in June from 45.4 in May. The UK also recorded a bigger-than-expected current account deficit of GBP8.540 billion in the first quarter.

The Canadian dollar strengthened against the dollar as crude oil prices rebounded back above USD71 per barrel, helping the commodity-linked currency.

The Australian dollar was marginally stronger in Asian trade late Thursday as support provided by stronger equities performance was eroded by a wider-than-expected blowout in the trade deficit. The currency is now close to the middle of the recent range it has held in past weeks and is expected to tread water ahead of the release of the U.S. non-farm payrolls data for June later Thursday.

Market expectation

With the market remaining bearish on the euro, dealers said, it may decline further in the thin-flow market ahead of the three-day weekend in the U.S. that starts with Independence Day on Friday.

The Australian dollar and the euro are what some players call "riskier currencies" and they tend to move in the same direction against the dollar.

Euro-sterling, which had been correcting away from its NY high at stg0.8596 through the Asian session, easing from stg0.8586 to stg0.8565, spiked higher to make a brief show above stg0.8600, touching stg0.8601 before easing back to currently trade around stg0.8588. This move allows cable to recover back to current level around USD1.6440, but expected to meet resistance on approach to USD1.6450. A break above may open a move back to USD1.6480 ahead of stronger area around USD1.6500. Support remains at USD1.6410/00.

EURUSD adding to earlier reports of demand placed between USD1.4100/80, trader's note that stops are building in the area between USD1.4080/70. Further demand seen placed toward USD1.4050 with reports of more stops below.

Most important events of the day

Published on  Thu, Jul 2 2009, 08:49 GMT