Daily Forex Overview

Previous session overview

On Thursday, the yen sank sharply against the dollar and the euro as month-end flows intensified the pressure on a currency already being sold in response to more fundamental concerns.

U.K. government scheme to protect banks against further losses from so-called toxic assets helped generate a more positive tone in markets and underpin risk appetite.

The euro started Thursday on a strong note, but ultimately ended the day little changed due to US dollar price action. EUR stuck to USD1.27 to USD1.28 range, supported somewhat by the UK's confirmation of assistance for large banks RBS and Lloyd's.

The British pound rose, benefiting from talk that the UK government plans to insure banks' toxic assets in an attempt to spur lending again.

The Japanese Yen weakened with the USDJPY breaking above JPY98 and dragging all the crosses higher. Recent weakness is being attributed to weakening Japanese Economic fundamentals although there has been little complaint from Japanese exporters and the BOJ/MOF has been very quiet about the rapid FX move.

The Canadian dollar remains supported by hope that policy makers are doing their best to rescue banks and avoid nationalization.

The Australian dollar was weaker late Friday, weighed down as Wall Street indexes continued to search out new bear-market lows, but it continued to be supported by some favorable economic data. The Australian dollar was quoted at USD0.6465 down from USD0.6500 late Thursday.

Market expectation

EURUSD falls to a 1-week low of USD1.2657 as stocks open lower and weigh on risk appetite. However traders looking back at the last week's EURUSD price action, going long at market, with a stop below USD1.26 is worth a look, taking profit toward USD1.2750. EURUSD now trades at USD1.2665.

EURJPY dropping to fresh lows for the day as euro-dollar probes the downside, light bids on the JPY123.50 area now under pressure. Additional demand noted into JPY122.60 and JPY122.20/00 with stops below.

Pound reported demand interest placed in the area from USD1.4215 through to USD1.4200 able to cushion the recent downside pressure around USD1.4208 on the initial challenge, but rate retains a heavy tone. Below USD1.4200 and rate can ease toward USD1.4175/70 ahead of stronger area between USD1.4160/50.

A batch of economic data is due out of Japan on Friday, including national CPI, unemployment rate, industrial production and retail sales. Euro zone unemployment rate will be announced at 10:00GMT while the U.S. will release fourth-quarter GDP, PCE, Chicago Fed PMI and University of Michigan survey later in the day.

Most important events of the day