Daily Forex Overview

Previous session overview

Dollar fell across the board as traders squared long positions ahead of the release of the closely-watched U.S. non-farm payrolls data, with rumors that the figure could be as high as one million increasing nervousness among market participants.

On Friday, the euro found a better bid overall and this was also mirrored in the EURUSD headline pair. A lot of market talk on an awful payrolls figure was a good reason to scale back USD long positions. The payrolls came out close expectations. However, markets apparently were prepared for the worst. Stocks and EURUSD tried to gain some ground after the payrolls, but the move had no strong legs and EURUSD turned south again later in the session. The pair closed the session at USD1.2653 compared to USD1.2540 on Thursday evening.

The British pound rallied against the dollar even after negative producer price inflation data in the UK, as dealers squared their position before the US non-farm payrolls figure was released.

The yen fell against the dollar in Asia early Monday after data showed that Japan posted its first current-account deficit in 13 years in January, but later recouped its losses on speculators' position adjustments.

The Canadian dollar recouped some of its losses from earlier this week as oil rose near USD45 a barrel, buoyed by China's optimism on economic rebound, and ahead of US unemployment figures.

The Australian dollar was slightly lower late Monday, as the currency failed to hold onto gains made on a late Wall Street rally last week with investors still tuned in for clues on the state of the domestic economy. The currency remains stuck within recent ranges as commodities prices fail to strike a convincing lead for higher-yielding currencies.

Market expectation

The euro is little changed as global stock markets meander while investors size up the likelihood of further declines in equities and the need to avoid risk.

For cable bids remain around USD1.4030, a break below to open a deeper move toward USD1.4000. Through the figure and rate can ease toward USD1.3985/80 ahead of USD1.3960/50. Resistance seen placed from around USD1.4090 through to USD1.4110, a break above to open a move on toward USD1.4125 ahead of USD1.4150 then USD1.4184.

EURUSD bids now seen placed around that posted low at USD1.2615, with stronger interest placed toward USD1.2600. A break below the figure can open a deeper move toward USD1.2585/80 ahead of USD1.2550/40. Resistance stays at USD1.2645/50, stronger between USD1.2670/80.

EURJPY falls to intraday low of JPY123.98 likely on position adjustments by speculators as opposed to flight to safety after Nikkei ends at 26-year low, says traders. Tips EURJPY support likely firm at JPY123.50 near-term, while resistance at JPY125.00 against last JPY124.20.

Looking ahead, finance ministers and central bank governors from the Group of 20 developed and developing countries are set to meet in London over the weekend, and some in the markets are watching how those nations will tackle the battered global financial system.

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