Daily Forex Overview

Previous session overview

The euro fell against the yen in Asia Thursday, as investors sold the single unit to cut down risks ahead of the European Central Bank's rate-setting meeting later in the day.

In the early Asian hours, players were reluctant to take risks despite a rise in Japanese stock prices as it is unclear what kind of untraditional easing measures the ECB may take, traders said.

The single currency rebounded strongly from USD1.3245 to USD1.3375 against the dollar after release of stronger-than-expected euro zone PMI service data (43.8 in April compared to 40.9 in previous month) but pared its gains in late New York session ahead of the ECB's policy meeting on Thursday.

Sterling rose against both the dollar and euro after the release of strong UK service sector data. The CIPS services PMI activity index rose to 48.7 in April from 45.5 in March, the highest reading since August 2008.

The Japanese Yen strengthened with Japan away for the third and final day USDJPY slipped towards JPY98. Crosses managed to remain fairly stable as their respective majors rallied on good sentiment.

A shock fall in unemployment punched the Australian dollar to fresh seven-month highs and prompted a sharp fall in interest rate futures Thursday, as market analysts predicted the downturn in Australia may not be as severe as first thought.

Market expectation

The euro is lower against the dollar and the pound Thursday, and little changed against the yen, reflecting mixed patterns that reveal the ever shifting attitudes toward risk.

The euro could rise to JPY133.00 and the greenback to JPY99.00, if the announcement of U.S. stress test results, due later in the global day, helps wipe out uncertainty over the U.S. financial markets, traders said.

EURUSD ongoing weakness in euro-sterling seen as the main weight on euro-dollar into the European session, triggering light stops under USD1.3270 down to USD1.3262. Bids now eyed into USD1.3250/45, more around USD1.3215/00.

Euro-sterling now trades at lowest levels since February 24, with light demand coming in around stg0.8750, stronger into stg0.8730. Cable said to have found Asian bids around the lows overnight. Stops now placed on a break of USD1.5160, with technical analysts then noting the 76.4% retracement of the move from December to January coming in at USD1.5196. BoE rate announcement today, with no change expected, main point of interest being whether the committee will announce an extension of QE.

Until Thursday's key events, the pound is likely to hold in ranges against major currencies, traders said.

Most important events of the day