Daily Forex Overview

Previous session overview

On Wednesday, a comeback for global risk appetites keyed a broad selloff in the dollar against most currencies other then the yen Wednesday, as the greenback received only limited relief from a guardedly more upbeat Federal Reserve policy statement.

The yen gained back some ground lost overnight to the dollar and euro Thursday after more bad news emerged on the U.S. auto industry.

After the Wall Street Journal reported that the U.S. Treasury Department's talks with lenders to keep Chrysler LLC out of bankruptcy had broken down, some players dumped dollars and euros for the yen, which they consider a safer haven currency.

Although the foreign exchange market had largely already priced in failure for the troubled auto maker, some players had persisted in believing Chrysler could avert this outcome, dealers said.

The Euro continued to rise rapidly as sentiment improved and Euro zone confidence improved. Of concern was German GDP Growth was downgraded to -6.0% vs. -2.25% initially. Euro rose broadly on Wednesday and hit session highs of 1.3342.

Sterling strengthened against the US dollar and other major currencies in line with a recovery in currencies perceived to be higher risk, though investors were cautious ahead the Federal Reserve policy decision.

The Japanese Yen was sold all day as Japan was away on holidays and sentiment/stocks improved.

The Australian dollar was stronger in Asia late Thursday as the appetite for equities and growth proxy currencies continued to improve on the back of better-than-expected corporate earnings in the U.S. and European sessions.

Market expectation

The euro is higher Thursday but its recovery seems to be slowing as the European market gets ready to open Thursday. Traders are watching the USD1.3350 level for a possible trigger to higher gains.

The yen could continue to gain into the weekend as Japanese players may buy the unit before the start of Japan's Golden Week holiday next week on concern events during that time could drive the currency up.

For EURUSD offers seen placed between USD1.3340/50, a break above to open a move on toward USD1.3380 ahead of stronger area between USD1.3395/1.3415. Support seen at USD1.3270, with interim interest noted around USD1.3285.

Equity markets are remaining firm underpinned risk appetite and has allowed cable to retest overnight lows at USD1.4855, currently trading around USD1.4845. Offers remain to USD1.4855, with stops now seen placed on a break of USD1.4860, which if triggered to open a move on toward USD1.4890, with sell interest seen placed from here, extending toward USD1.4910 (76.4% USD1.5069/USD1.4397/USD1.4898 1.618% swing of USD1.4855/1.4785). Support seen placed at USD1.4800, stronger at USD1.4785/80.

Foreign exchange traders expect the Australian dollar to find some support at the 200-day moving average of USD0.7210 - a previous resistance level - in the offshore session.

Most important events of the day