Daily Forex Overview

Previous session overview

On Wednesday, the swings in investor risk aversion/risk appetite remained the most important guide for trading in the currency markets.

The euro and dollar rose against the yen in Asia Thursday after better-than-expected Japan machinery orders data pushed up local share prices, increasing investors' risk appetite. Japan's core machinery orders rose 1.4% on month in February, much better than the market's consensus forecast of a 7.9% drop, and marking the first increase in five months.

After two days of profit taking on Monday and on Tuesday, investors again turned less negative and EURUSD joined this move. The increase in the funds for the car scrapping subsidy in Germany was at least one factor behind the stock market rebound. The pair set an intraday low in the USD1.3150 area at the start of trading in Europe. EURUSD tested bids in the USD1.33 area after the close of the European markets and closed the session at USD1.3282, compared to USD1.3272 on Tuesday.

The Sterling fell in sympathy with Euro finding support below 1.4700 but struggling to make gains. UK Q1 GDP is forecast at -1.5% but the market is focusing on the BOE decision today with any comments about quantitative easing.

The Japanese Yen broke below JPY100 on heavy cross selling especially in the EURJPY forcing the USDJPY lower.

The Canadian dollar rose against the US dollar as US stock index futures steadied and data showed Canadian housing starts rose 13.7 percent, more than expected in March.

The Australian dollar was strong late Thursday buoyed by gains in Asian share prices which allowed the currency to quickly push aside earlier grim news on unemployment. The currency was initially knocked lower by news of a shocking rise in unemployment in March, which economists said could prompt the Reserve Bank of Australia to cut rates again next month.

Market expectation

The euro is lower on Thursday, and EURUSD is likely limited to USD1.3350 as worries persist about the euro zone outlook.

EURUSD traders note that Eastern European names sold euro-dollar off highs, adding that it wasn't Russian. Rate currently trades around USD1.3300. Support seen placed to USD1.3295, a break below to allow for a deeper pullback toward USD1.3280.

Pound corrective pullback off early rally highs of USD1.4780 extend back to USD1.4715, with bids seen placed from around USD1.4710 through to USD1.4700 with stops below. Resistance now seen placed between USD1.4740/50, stronger toward USD1.4765 ahead of USD1.4780.

EURJPY extends recovery off overnight lows of JPY132.03 to JPY133.55, with rate currently holding around JPY133.35. Next band of reported resistance seen placed between JPY133.80/00.

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