Daily Forex Overview

Previous session overview

The yen weakened slightly against the dollar and euro in Asian trading Friday as a continued strong Japanese share market performance led to more risk tolerance, to the detriment of the major funding currency.

But trading was subdued as the market wanted to see the results of U.S. non-farm payrolls data later in the day before building large positions, traders said.

The U.K. pound, meanwhile, continued to languish on lingering political uncertainties in the U.K.

Making the outlook even murkier was U.K. Work and Pensions Secretary James Purnell's announcement early in the Asian day he quit Cabinet and called for Brown to stand down.

Much of the pressure on the dollar came from rising U.S. stock markets and higher global oil prices, which neared USD70 a barrel. These moves suggested risk appetite is improving, which reduced demand for dollars as a safe haven, a key source of the greenback's strength throughout the financial crisis.

The euro fell against the dollar in volatile trading as Trichet did little to change expectations for interest rates in the euro zone. With no hint that another 25 basis-point cut in the second half is likely, Trichet admitted they'll have negative growth this year but says it will recover in 2010.

Sterling plunged Thursday on rumors U.K. Prime Minister Gordon Brown was planning to resign, and London's quick dismissal of the talk as "nonsense" wasn't enough to restore confidence in the U.K. currency. GBP fell from a London high of USd1.6435 to USD1.6090 around noon.

The Australian dollar was marginally firmer in late Asian trade Friday as investors refrained from taking large positions ahead of key U.S. employment data.

Market expectation

The euro is holding slightly higher Friday as the dollar continues under pressure.

For EURUSD offers seen placed between USD1.4215/25, a break to open a move toward USD1.4240/50 ahead of USD1.4275. Support seen at USD1.4180 ahead of USD1.4165, with demand noted from this level, extending toward USD1.4150. Stops noted on a break below. A break here may allow for a deeper move toward USD1.4130/20 ahead of USD1.4105/00 and USD1.4070. Larger stops noted under USD1.4050, which if triggered open a potential drop to USD1.3730.

GBP sliding again, as Japanese players sell due to lingering political risks in U.K, say analysts. Players are squaring their pound positions to decrease their exposure against the political risks in the U.K. over the coming weekend. GBPUSD may fall to USD1.5900 and GBPJPY may fall to 155.00. Adds, if 155.00 broken then for GBPJPY, next target will be 152.00 as 155.00 as it is an important technical line.

European stocks are expected to open higher Friday, following gains in Asian and U.S. markets and gaining some ground after three successive losing sessions.

The focus will be largely on the U.S. nonfarm payrolls data, as investors watch for clues as to whether this key employment indicator suggests the global economy is indeed turning a corner.

Most important events of the day