Daily Forex Overview

Previous session overview

On Friday, the dollar and the yen remained higher against many major rivals, though they were off their best levels of the day amid swings in stocks.

The euro slumped throughout much of Friday, breaking below immediate support at 1.2690, as Euro-zone CPI slowed in line with expectations to an annual rate of 1.1 percent, the lowest since 1999.

The British pound benefited from a UK government bank insurance plan launch for toxic assets in attempt to spur lending. The news came after Royal Bank of Scotland reported a 24 billion pound loss. However, the sterling has fallen since then as UK consumer confidence remained the weakest in 30 years.

The Japanese Yen managed to gain after a week of losses as the speed of the decline finally caught up with the USDJPY. Traders are beginning to talk about 100 Yen as the key target going forward and the biggest test for this recent rally.

The Canadian dollar was hindered by a stronger US dollar amid safe haven buying and on expectation of dollar demand for the month-end fixing.

A confluence of pressures ranging from Eastern Europe emerging market fears to weak domestic economic data and falling regional stock markets pummeled the Australian dollar Monday, setting the unit up for further losses offshore. The Australian dollar was quoted at USD0.6336 down from USD0.6509 late Friday.

Market expectation

Asian currencies fell against the dollar during their regional trading Monday as sliding share markets prompted players to dump these units in favor of the dollar, a currency that they consider to be less risky.

EURUSD traders note that there was intervention in several Asian currencies overnight, as they were knocked by the fall in Asian equity markets, with sales from the Bank of Korea the highlight. This bank needs to balance books after dollar sales intervention by selling euro-dollar, often acting into early European trade.

Talk in Asia that accounts that went short on the early move lower have left stops above USD1.2630, which remain intact, with offers placed between USD1.2620/30 ahead. Bids seen placed at USD1.2580, more between USD1.2550/45 with stops below USD1.2540. Larger bid placed at between USD1.2500/1.2450.

Sterling buoyancy seen provided by euro-sterling as the euro retains a generally heavy tone following the weekend rejection of Hungary's aid plea for Eastern Europe. Rate currently trades around USD1.4285. Offers placed from USD1.4290 to USD1.4300, more toward USD1.4320/30. Above here and rate can push toward USD1.4350-60/65. Support USD1.4235/30, stronger between USd1.4205/00 ahead of USD1.4180.

Most important events of the day