Daily Forex Overview

Previous session overview

On Thursday, the euro rebounded against the yen and trimmed its losses versus the dollar Thursday afternoon, as a late recovery in U.S. stocks eased risk aversion.

The pound and commodity-linked currencies, including the Canadian dollar and the Australian dollar, also recouped most of the losses against the U.S. currency and the yen.

The European Central Bank's President Jean-Claude Trichet said Thursday he appreciates comments by the new U.S. administration that a strong dollar is in the U.S. own best interest, pointing to remarks made by the U.S. treasury secretary Timothy Geithner.

EUR fell from 1.2940 to 1.2720, rebounding quickly to above 1.28 after the Moody's report.

The British pound remains sluggish after Bank of England Governor Mervyn King on Wednesday said measures to revive U.K. lending may not work and was ready to take unconventional policy easing steps--like quantitative easing--to revive the economy.

On Thursday, USDJPY trading joined the boarder market theme of risk aversion. However, the yen gains were again far from impressive. USDJPY set and intraday low in the 89.85 area before noon in Europe, but performed quite a decent rebound later in the session. USDJPY even closed the day higher in a daily basis at JPY90.94.

The Canadian dollar remains weak on concerns about the vague U.S. bank plan. Safe-haven flows will continue to drive investors out of the loonie and into safer, less risky investments.

The successful passage of the Australian government's economic stimulus package AUD41.5 billion through the nation's legislature strengthened the Australian dollar in late Asian trade Friday.

Market expectation

The euro is higher against the U.S. dollar and the Japanese yen in quiet trade, as risk appetite was helped by the regional stock market gains.

Traders were looking ahead to a meeting of finance ministers from the Group of Seven industrialized nations in Rome, though foreign exchange was unlikely to be a major topic.

But market participants considered the recovery in the euro as a short-term technical correction and cautioned that the euro and the pound have more room to fall, given the weak global outlook and the volatility in stock markets.

The higher share prices were also buoying currencies such as the British pound, Australian dollar and New Zealand dollar against the yen, dealers said. The higher euro-yen and yen crosses are helping the euro against the dollar as well today, said analysts.

But dealers said the euro was not likely to break much higher in the near-term due to expectations that the European Central Bank will cut interest rates further in March. And the currency's top is also heavy as many players are still wary that more negative economic news in Europe could pull the common currency down again.

Most important events of the day