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Daily Forex Overview

Thu, Oct 29 2009, 12:42 GMT
by Raivis Zile

Dukascopy Swiss FX Group

Previous session overview

The euro logged fresh two-week lows against the yen and the dollar in Asia on Thursday, as weakness in commodity and share prices prompted investors to sell higher-yielding but riskier currencies.

The common European currency briefly hit JPY132.81 during early Asian hours, the lowest since Oct. 14.

Meanwhile, the yen, which is considered the safest of the major currencies, rose against the dollar, with the greenback touching a one-and-a-half-week low of JPY90.23.

Wednesday's disappointing US new-home sales data added to worries over the US economic recovery. Home sales unexpectedly fell in September, following five consecutive increases.

The euro fell to a two week low against the US dollar as weaker-than-expected US data prompted a sell-off in higher-yielding currencies. The single currency continues to extend its losses as it remains a proxy for risk appetite.

Sterling fell across the board as lower equities and oil prices encouraged investors to trim exposure to currencies perceived as higher risk. Tuesday's much weaker-than-expected US consumer confidence data along with today's lower US new home sales data increased concerns over the extent of the global economic recovery, weighing on equities and triggering flows into currencies such as the greenback and the yen.

The Australian dollar was sharply lower late in Asia Thursday while bond futures soared as a correction in risk appetite gained momentum with dealers awaiting a crucial health check on the U.S. economy. 

Market expectation

The yen continues to advance against the dollar, euro and pound on Thursday as stocks are sold off and investors seek to curtail risk.

The euro could fall further if commodities prices decline, suggesting the worsening of global economic conditions and boosting the allure of safe currencies such as the yen and the dollar, also, if results of U.S. gross domestic product data for the July-September period due at 1230 GMT disappoint, the euro could drop further, dealers said.

For EURUSD bids remain in place toward USD1.4700, stronger between USD1.4685/80. Offers seen placed at USD1.4736 through to USD1.4750. Further offers USD1.4770/80. US GDP is the main focus.

EURGBP under pressure again into early European trade Thursday, with traders noting further long positions getting squeezed out, with continued talk that M&A related sales have provided the main downside lead.

USDJPY traders are noting bids in the JPY90.20/15 area this morning, with stops coming in below JPY90.00. Technical analysts see the 50% retrace of this month's rally under pressure at JPY90.17, ahead of the 61.8% retrace at JPY89.66.

European stocks are expected to extend their losses Thursday, as traders continue to take the opportunity to book more profits on this year's rally as they question the pace of the economic recovery and wait cautiously for the release of U.S. third-quarter gross domestic product data.

Most important events of the day

Published on  Thu, Oct 29 2009, 12:45 GMT