Daily Forex Overview

Previous session overview

The dollar rose against the yen in Asia Thursday because speculation that Japanese institutional investors will buy a lot of foreign assets prompted overseas investors to sell the yen.

Sentiment turned against the yen versus the dollar earlier in the week, when players failed to push the greenback below the technically-important JPY93.50 mark. In addition, Japanese trust funds' scheduled purchase of overseas assets this week prompted non-Japanese investors to buy back the dollar, dealers said.

But the dollar's sustained recovery above JPY97 is unlikely, dealers said. Japanese exporters have already placed dollar-selling orders around this level. And lingering doubts about the U.S. economy are keeping dollar-bullish sentiment in check.

The dollar got a boost after Moody's affirmed Wednesday that its U.S. triple-A rating is safe, citing the country's diverse and resilient economy, strong government institutions and high per capita income.

The Euro struggled at the USD1.4000 level before falling heavily in the final hours of the day on the back on raising US yields. The pair fell to USD1.3850 but speculated support failed to appear and the slide continued into Thursday. Also hurting the sentiment was a FDIC report with a negative outlook on US loan quality. German CPI fell to 0.0% on a y/y basis.

GBP traded at its highest level since last November supported by improving housing data and optimism that the worst of the financial crisis is over, business economists expect US recession to end in the third quarter even as unemployment continues to rise.

The Australian dollar was weaker in Asian trade late Thursday as surging Treasury yields triggered fears about the impact of rising U.S. government debt on the global economy.

Market expectation

Players said dollar-buying on the speculation may lift the greenback to JPY97.00 later in the global day.

Some players are paying attention to stock price movements and developments regarding troubled automaker General Motors Corp., dealers said.

The euro and dollar are rallying against the yen on Thursday, but the dollar in turn is well higher against the euro and U.K. pound. Dealers said investors are turning to the dollar again as protection against risk.

The euro could see accelerated selling with a fall under USD1.3800, while the pound has stiff resistance around USD1.60 for now.

For EURUSD offers remain in place to USD1.3840, stronger between USD1.3850/55 with stops above USD1.3860. Support remains toward USD1.3790, with interim interest seen building again around USD1.3800. Stops noted through USD1.3785, which if triggered opens a deeper move toward USD1.3765.

For Pound offers remain in place around USD1.5950/55, a break above to open a move back toward USD1.5975/80. Support seen placed from around USD1.5910, with interest extending to the overnight base at USD1.5899. Further demand seen placed at USD1.5885/80 with stops below.

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