Daily Forex Overview

Previous session overview

On Friday, the yen and the dollar fell against many major rivals, including the euro and the British pound, as a rally in U.S. stocks spurred investors' appetites for risky assets.

The U.S. Department of Labor said Friday non-farm payrolls fell a seasonally adjusted 598,000 in January from a revised 577,000 loss in December. This is the largest payroll loss since December 1974.

European Central Bank is seen as behind the curve in monetary policy. The ECB left rates unchanged at 2 percent and indicated a likely rate cut in March. The euro dipped on news that German industrial production plunged to near 18-year lows.

The British pound was very strong against the US dollar and Japanese yen on Friday, though the currency faltered against the indomitable Aussie and Kiwi dollars, suggesting that most deeply disappointing data has already been priced in to pound.

USDJPY was waiting to be squeezed higher, from 90.75 to 92.20. JPY volatility has fallen in the past week, making carry trades more attractive.

The Canadian dollar tumbled as its own economy lost 129,000 jobs in January, adding worries that the country's economy is sagging.

The Australian dollar was stronger late Monday, driven higher by an incongruously higher appetite for risk in the face of dire U.S. jobs numbers. The Australian dollar was quoted at USD0.6689, up from USD0.6521 late Friday. It hit a high of USD0.6799 in New York trade Friday, its highest reading since Jan. 19. Against the Japanese yen, it was at JPY61.11, from JPY59.24.

Market expectation

The euro is lower Monday as selling against the yen by Japan's exporters also pulled the euro/dollar lower. The euro is basically still weak against the yen and dollar given the lingering euro-zone financial and credit concerns, said FX dealers.

But some traders said the U.S. currency could rebound and head toward JPY94 later this month amid increased optimism that the U.S. will be able to come up with a solid stimulus plan to fight its economic and financial crisis.

EURUSD currently trades around USD1.2905. Bids said to remain in place from around the USD1.2878 level, with interest strengthening toward USD1.2850. Resistance seen at USD1.2920/25 ahead of USD1.2950, with sell interest said to extend from here through to USD1.2965. Above here and the area between USD1.2990/00 moves back into view.

For Pound bids remain in place toward USD1.4700, a break to allow for a deeper move toward USD1.4680/70 ahead of USD1.4650. Resistance noted at USD1.4740/50, more toward USD1.4770 ahead of USD1.4790/10.

Many investors believe the awful employment data released in the U.S. Friday would help secure the passage of President Barack Obama's economic stimulus package through the U.S. Senate.

Such hopes fueled a share market rally on Wall Street, which led Asian equities markets and associated growth-proxy currencies like the Australian dollar higher Monday.

Most important events of the day