Daily Forex Overview

Previous session overview

The dollar and yen rose against other major currencies for another day on Thursday as bleak data from around the world dented hopes of a global economic recovery and boosted safe-haven flows into the U.S. and Japanese currencies.

The euro fell against the yen and dollar in Asia Friday following European Central Bank President Jean-Claude Trichet's remarks in Tokyo hinting at more policy steps, including a further rate cut.

The euro fell to USD1.3065 from USD1.3153 and to JPY129.95 from JPY130.93, after Trichet's comments made their way around the market.

On Thursday the single currency fell to as low as USD1.3126 versus the dollar and JPY129.36 against the yen after a report showed industrial production in Europe contracted by the most on record in February.

Sterling fell broadly as global economic and US earnings concerns encouraged investors to scale back their exposure to risk, causing the pound to reverse much of its recent gains. The pound and other currencies seen as higher risk also came under pressure as figures showing the weakest quarterly Chinese growth since records began in 1992.

The Japanese Yen came under heavy buying after China's GDP resulted in profit taking and risk aversion. The Sentiment managed to be turned around in the USD session and USDJPY finished well above JPY99.

The Canadian dollar touched its highest level in more than 13 weeks against the US dollar, helped by rising global equities, firmness in oil prices and data showing a slight rebound in domestic factory sales.

The Australian dollar was lower in Asia Friday on thin volumes, with most in the market awaiting the release of first quarter profits by Citigroup later today. Australian dollar was USD0.7187, down from USD0.7267 late Thursday. Against the Japanese yen, it was JPY71.515, down from JPY71.935.

Market expectation

The euro is weaker against the U.S. dollar and Japanese yen, though trade was quiet before the weekend.

About EURJPY Technical traders note the cross failed to close below the Kijun line of the Ichimoku Cloud yesterday, today coming in at JPY129.76. This level seen as key to further downside progress. Thursday's base then comes in at JPY129.36, with bids then noted around JPY129.00 (76.4% JPY126.40-JPY137.39), and said to be stronger at JPY128.25/20.

Some traders are now talking of dollar-yen bids underpinning at JPY98.80/00, ahead of stops tipped at JPY98.60. Offers remain at JPY99.75/90 but there is talk of stops at JPY100.00. Some traders also relating speculation there will be some hedging ahead, related to the Japanese purchase of a San Miguel stake worth USD1.2 billion.

Looking ahead, the market will turn to Citigroup's earnings report to be released later in the day. Players say positive results will not necessarily lead to a stronger dollar. As good figures have already been priced in, the dollar could fall due to players' sell-on-the-fact orders, said analysts.

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