Daily Forex Overview

Previous session overview

The US dollar ended the day mostly lower against the majors - though the currency did gain against the Swiss franc, euro, and Canadian dollar.

The euro rose against the yen and dollar in Asia Thursday as Asian share rises prompted short-term investors to buy the riskier euro, but its rise will likely be limited ahead of the European Central Bank's policy meeting.

On Wednesday, the EURUSD cross rate didn't show any outspoken trading dynamics. The euro temporary dropped below the USD1.32 mark at the start of trading in Europe. This was due to the negative opening on the European stock markets and on the back of a Bloomberg article that the Obama administration believed that a negotiated bankruptcy was the most likely way to restructure GM. The US eco data (ADP and ISM) were mixed. They caused some intraday volatility but at the end of the day EURUSD closed the session at USD1.3249.

The Sterling outperformed other currencies as UK data improved with Manufacturing PMI at 39.1 vs. 34.9. GBPJPY rallied towards JPY143 whilst the cable made gains towards the key USD1.4500 level.

In the early Asian session, some non-Japanese hedge funds bought the euro to adjust their holdings ahead of the ECB meeting, sending the unit to a high of JPY131.20 from JPY130.55 late Wednesday in New York.

The Australian dollar gained steadily Thursday as investors were less risk averse following a U.S. equity market gains, but traders say a torrent of risk events later could deflate the mood.

Market expectation

For EURUSD offers seen placed toward USD1.3300 (USD1.3301 76.4% USD1.3343/1.3166) with talk of weak stops placed above USD1.3305. Through here and rate can push on toward USD1.3340/50. Bids - USD1.3250/40, more toward USD1.3225/15.

Stronger demand for pound emerged into early Europe, with the release of Nationwide housing data, which surprised with a m/m rise of 0.9% providing the added impetus to take rate through USD1.4550 and on toward USD1.4600. Rally faltered around USD1.4597, currently trading around USD1.4585. Offers seen placed toward USD1.4600, more at USD1.4620/25 ahead of USD1.4640/50. Support now seen placed at USD1.4550 ahead of USD1.4515/00 area.

EURGBP retains a heavy feel, currently holding around stg0.9120. Support seen placed between stg0.9110/00, a break to open a deeper move toward stg0.9075/70. Resistance now seen placed at stg0.9150/55.

European stocks are expected to open higher Thursday, with sentiment boosted by hefty gains on Wall Street Wednesday and on Asian markets earlier Thursday. Now investors will turn their eyes towards the European Central Bank ahead of an expected interest rate reduction.

Meanwhile, the dollar rose slightly against the yen, but traders took a wait-and-see stance ahead of the ECB meeting and the summit of Group of 20 largest developed and developing economies.

Traders said the U.S. unit could pick up versus the yen if U.S. non-farm payrolls, due out Friday, log better than expected. Economists surveyed by Dow Jones Newswires say the index may decline 673,000 in March, compared with a 651,000 contraction in February.

Some traders forecast the yen will weaken due to Japan's continued economic slump, possibly falling to as low as JPY105.00 to the dollar in coming months, dealers said.

Most important events of the day