Daily Forex Overview

Previous session overview

The US dollar strengthened after disappointing US retail sales data and caution ahead of a string of corporate earnings boosted safe-haven flows into the US dollar.

The yen gained further against the euro and dollar in Asia Wednesday as lower regional share prices prompted players to continue buying back what they regard as a safe-haven unit. Overseas funds and short-term investors bought the Japanese currency as the benchmark Nikkei 225 Stock Average fell more than 1.2% by early afternoon, dealers said.

On Tuesday, EURUSD gave up a part of Monday's gains. This move was a bit remarkable as European stock markets initially posted quite a decent performance. The US eco data (PPI and retail sales) were weaker than expected. Equity investors were disappointed by the outcome and this time the euro slipped a few ticks lower, too. EURUSD closed the session at USD1.3259, compared to USD1.3368 on Monday.

The Sterling found strength in a report from the Telegraph calling for a bottom in the UK housing slump. Risk aversion capped gains however with the USD1.5000 level continuing to elude the resurgent Cable.

The Japanese yen continued to gain against the US dollar and most major currencies. As US stocks fell, this prompted investors to shun riskier assets and seek safety in the Japanese currency.

A cooling of risk appetite saw the Australian dollar lose ground Wednesday, as traders pointed to another mix of economic data and earnings reports due in the U.S. later as key to near-term sentiment.

Market expectation

The euro is falling Wednesday in synch with stock markets, as the risk factor resurfaces. Standard & Poor's Ratings Services said Tuesday that as many as 29% of junk-rated European companies could default on their debt by the end of next year amid tight credit markets and the deterioration of the global economy and corporate earnings.

EURUSD sinks back to retest overnight lows at USD1.3219, with reported demand noted from around this level extending toward USD1.3200. Asian traders overnight noted stronger interest placed around the figure, with talk of stops through USD1.3190. Resistance remains back at USD1.3260/65.

Pound extends corrective pullback to USD1.4830, as rate tracks continued euro-dollar slippage, and while euro-sterling holds tight around stg0.8900. Cable currently trades around USD1.4858, as it recovers back. Resistance noted between USD1.4860/70, above here and rate can edge on toward USD1.4880. Bids now seen placed from around that USD1.4830 level, stronger between USD1.4825/20.

Dealers said the rumor of a large Asian company selling Australian dollars was causing some short-term players to follow suit, helping push the unit to a one-week low at JPY70.25. But dealers said the currency could bounce back if market sentiment improved.

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