Daily Forex Overview

Previous session overview

On Friday, the dollar rose sharply against the euro while strengthening versus the pound and the Swiss franc after the U.S. payrolls report showed the number of job losses in December was smaller than feared.

The EURUSD dropped after the US jobs data was released falling heavily from the 1.3700 level to slide under 1.3500. European Retail Sales beat forecasts at 0.6% vs. 0.1% expected in November. German Industrial Production continued to deteriorate to -3.1% vs. -2.0% expected in November.

The British pound remained relatively strong on Friday, as it surged against the euro but slipped versus the US dollar toward support at 1.5135. The moves have been somewhat surprising in light of the fact that the Bank of England cut the Bank Rate to the lowest level since the bank was founded in 1694.

The Japanese yen remains range bound, gaining strength from risk adverse investors despite continued losses on the Nikkei.

Following the lead of the USD, the Canadian dollar strengthened slightly following the release of Canadian jobs data which, while weaker than expected, was not as extreme as some market participants had feared.

The Australian dollar was dragged sharply lower Monday by a renewed wave of market pessimism fueled by broad weakness in Asian share markets and domestic data pointing to accelerated job losses in coming months.

Market expectation

The euro is lower ahead of the ECB's rate decision Thursday. The gloomy E.U. data are driving the weak tone in the euro. The market expects a 50-basis-points rate cut.

European dealing opens with euro-dollar pushing back up to trade mid-range around USD1.3430. Traders now are reporting bids coming in around USD1.3320 with stops under the January lows in the USD1.3315/10 area. Light offers come in at USD1.3440/50, more at USD1.3470/75.

Euro-sterling trades back around stg0.8890 at time of writing, with bids reported into Friday's lows in the stg0.8840 area and stops below. A break of USD1.5050 in cable seen exposing light bids placed at USD1.5000/1.4990, while Technical analysts see support at USD1.4894 (21-day m/a).

Most important events of the day