Daily Forex Overview

Previous session overview

The dollar and the euro gained slightly against the yen in Asia Friday, as U.S. financial institutions and Asian players bought the two currencies to take advantage of their overnight slide versus the Japanese unit.

But ahead of a closely watched U.S. jobs report later in the global day, trading was thin as players refrained from pushing the currencies one way or the other, dealers said.

On Thursday, the EURUSD currency pair drifted south, especially during the European trading session. The pair lost already part of the Wednesday gains in Asia and this trend was extended after the start of trading in Europe. EURUSD soon reversed the losses at the start of the press conference of Trichet and settled in the mid USD1.25 area. EURUSD closed the session at USD1.2540, compared to USD1.2661.

The British pound ended the day down slightly against the US dollar on Thursday, though the pair remains above key support at USD1.40. GBPUSD initially fell sharply on news that the Bank of England cut rates in line with expectations by 50 basis points to a record low of 0.50 percent.

Dollar declined against the yen from JPY99.69 to JPY97.72 and the Japanese currency rebounded against the euro and sterling from JPY125.75 to JPY122.70 and from JPY141.50 to JPY138.06 respectively.

The Canadian dollar weakened against the US dollar as oil prices dropped, reducing investor risk appetite.

Sharply lower regional stock markets and rapidly worsening sentiment toward the global economy sent the Australian dollar lower in Asia Friday, as traders await likely dire U.S. jobs data. The Australian dollar was quoted at USD0.6429 down from USD0.6436 late Thursday.

Market expectation

Currency markets are relatively quiet with traders holding off before the U.S. data, though analysts said riskier currencies like the Australian dollar were biased for further falls.

The stock falls could prompt U.S. players to dump their assets held in foreign currencies and bring them back to the U.S. to make up for increasing equity losses at home. In that event, investors would have to buy dollars, possibly pushing the unit up against currencies such as the euro and yen, dealers said.

EURUSD up ahead of closely watched U.S. jobs data later, as players buy to hedge against bets on EUR falls following non-farm payrolls due at 1330 GMT, says analysts. EURUSD last USD1.2698 against afternoon session low USD1.2568. This appears to be position adjustment, as there is no news that could be driving it, they say.

For GBPUSD offers remain in place at USD1.4280, with further sell interest noted from above USD1.4290 through to USD1.4305 with stops placed on a break of USD1.4310. Through here and rate can push toward USD1.4350 ahead of USD1.4365/85. Support now seen placed at USD1.4215/00, a break to allow for a deeper pullback toward USD1.4175/70 ahead of USD1.4150.

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