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Daily Forex Overview

Wed, Nov 25 2009, 08:22 GMT
by Raivis Zile

Dukascopy Swiss FX Group

Previous session overview

The U.S. dollar fell to a seven-week low against the yen in Asia on Wednesday, as fragile Asian stocks prompted speculators to buy the safe-haven yen while Japanese exporters sold dollars for a regular settlement.

The U.S. unit declined to JPY88.20 it's lowest since Oct. 8 in early Asian trade, before recouping some losses. A risk-averse environment also sent the euro to an intraday low of JPY132.05.

Another factor behind the dollar's fall was Japanese exporter selling on this regular settlement day the 5th, 10th, 15th, 20th and 25th of each month.

As of 0450 GMT, the dollar stood at JPY88.31 compared with JPY88.55 in New York late Tuesday. The euro changed hands at JPY132.45 compared with JPY132.49. The Dollar Index, which measures the currency's value against six major units, was at 74.937, compared with 75.116 overnight in New York.

Yesterday EURUSD currency declined briefly to USD1.4888 due to the more than 3% drop in China stock market. Cross buying versus sterling lifted euro to as high as USD1.4989 before another retreat was seen in New York morning. The pair later rebounded again after the FOMC minutes was released and ended the day little changed against the dollar.

The Pound tested USD1.6500 in Europe but with little new from Governor King's speech the pair rallied off lows with the Euro. The pair struggled near USD1.6600 as the sell on rally mentality continues to hurt the GBP.

The Australian dollar enjoyed a firm session in Asia on Wednesday after better-than-expected construction data and an upbeat central bank speech spurred bets for another rate hike next week. 

Market expectation

The dollar fell to a seven-week low against the yen in Asia Wednesday as fragile stocks prompted speculators to buy the safe-haven yen, while the euro also ticked higher against the U.S. currency.

Investors are focused on U.S. data due later in the global day. Economists tipped October's durable goods orders to rise 0.5% from 1.4% previously, while the Reuters/University of Michigan consumer confidence index for November was expected at 66.8 from 70.6 the previous month.

The dollar may fall further to JPY87.80 and the euro to JPY131.80 if U.S. personal spending and new home sales slated for release later the global day surprise to the downside, weighing on share markets.

For EURUSD offers seen placed to USD1.5010, with a mix of stops and further offers positioned between USD1.5010/20. A break of USD1.5030 may open a move on toward USD1.5050/70, where strong sell interest is said to reside. Recent reports noted barrier interest at USD1.5050 and USD1.5070 but no recent reiteration of such heard. Bids remain in place at USD1.4955/50, with interim interest seen at USD1.4980.

European stocks are expected to open higher Wednesday, benefiting from a late recovery on Wall Street and a slight pickup in risk appetite following Tuesday's worries about capital levels in the global banking system.

Most important events of the day

Published on  Wed, Nov 25 2009, 08:34 GMT