Daily Forex Overview

Previous session overview

The dollar edged higher against the yen and the euro in Asia Friday as speculators bought back the greenback to lock in profit ahead of a meeting of Group of Eight finance ministers.

With the markets being dominated by a small number of short-term speculators, there was little impact on exchange rates from rallies in Asian stocks, which often spark demand for riskier currencies such as the euro and sterling, dealers said.

The dollar raised a third of a yen to JPY97.96 from New York late Thursday.

Euro fell briefly to an intra-day low of USD1.3943 against the dollar after the release of U.S. jobless claims and retail sales data, the single currency rallied from there to as high as USD1.4178 against the greenback before retreating due to profit-taking.

The Pound extended its gains, hitting its highest level in 2009 versus the euro, reflecting the belief that the economy is over the worst of the recession. A poll showing rising UK inflation expectations and data pointing to economic growth in April and May bolstered the view that the UK economy may be recovering.

The Australian dollar was stronger but off its heady peak late Friday as a confidence-driven run up in risk appetite was tempered by some profit taking. Economic data, both domestic and offshore, have been broadly supportive of the Australian dollar this week.

Market expectation

The euro and pound are little changed against the dollar Friday and traders look for a period of consolidation ahead of the weekend, as investors pause to assess the latest gains in various instruments in relation to economic prospects.

G8 policymakers are unlikely to focus much on market-sensitive issues such as currencies or monetary policy, many investors kept away just in case to hear what the officials have to say about the global economy, dealers said. Traders are also guarding against any comments finance ministers may make on government bonds, interest rates or currencies on the sidelines of the meeting.

During the G8 talk itself, there probably will be no detailed debates on currencies because central bankers are absent from the meeting, as usual, said analysts.

European stocks are expected to open marginally lower Friday, as investors pause for breath, as the week draws to an end, and digest the recent talk about economic recovery.

EURGBP traders flash up that a UK clearer seen providing main supply as rate pressures support area between stg0.8500/0.8495. Break here to open a deeper move toward stg0.8480.

For EURUSD support said to remain in place around USD1.4070 with stronger interest placed toward USD1.4050. Further support seen placed around USD1.4030 ahead of USD1.4005/1.3995. Resistance seen placed around USD1.4100, currently under pressure, a break and clear above to open a move toward USD1.4130/35. Through here and rate can extend move toward USD1.4150 ahead of stronger interest placed toward USD1.4180.

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