Daily Forex Overview

Previous session overview

The dollar and yen fell on Monday as European and U.S. equity markets rebounded after U.S.

Traders in Asia reacted skeptically to U.S. Treasury Secretary Timothy Geithner's statement overnight that he believes the government has made "reasonably good" progress in improving the credit crunch, dealers said.

On Tuesday, the EURUSD pair entered calmer waters after the sell-off that resumed early last week. Stock markets continued to trade in a nervous and volatile way but after all, the decline was less sharp and this also slowed the decline of the euro against the dollar. The pair moved up and down in the USD1.29/1.30 range and closed the session at USD1.2948, slightly higher from the USD1.2921 close on Monday.

Sterling rose against the dollar recovering from steep falls overnight as investors bought the currency at cheaper levels. Sterling gains were also supported in tandem with the euro strengthening against the dollar.

The Japanese Yen tracked equity markets to weaken in the US session as risk appetite improved and banking stocks rallied. USDJPY jumped towards JPY99 although sluggishness in the EURJPY meant gains were limited.

The Australian dollar managed to nudge higher in Asia, despite sluggish regional equities, while interest rate futures weakened after a positive close on Wall Street. The Australian dollar was USD0.7053, up from USD0.7025 late Tuesday. Against the Japanese yen, it was JPY69.32, up from JPY69.13.

Market expectation

The yen gained against the dollar and euro in Asia Wednesday as lackluster regional share markets and lingering worries over the U.S. economy prompted players to buy the safe-haven Japanese unit, dealers said.

Some players said the yen could clock more gains against the European currency if global stock markets head lower in the days ahead.

EURUSD traders note that stops now seen placed below USD1.2900. This added to earlier talk of demand seen positioned between USD1.2910/00, with stronger demand noted between USD1.2890/80. Still talk of option barrier interest at USD1.2875 and at USD1.2850. Offers seen placed at USD1.2950 through to USD1.2960, stronger between USD1.2975/80 ahead of USD1.2995/00. Traders mentions 'large' stops placed on a break of USD1.3020.

For Pound offers seen placed between USD1.4675/85, a break above to open a move on toward USD1.4700/10. A break above here can open a move on toward USD1.4735 ahead of USD1.4750 and stronger level at USD1.4765/70. Bids seen placed at USD1.4625/20 ahead of USD1.4610/00.

Analysts said the main focus overnight will again be the performance of U.S. equities, which are a key bellwether for global risk appetite.

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