Daily Forex Overview

Previous session overview

The euro rose against the dollar and yen in Asia Friday, as firm Asian stocks and higher crude-oil prices led short-term investors to buy riskier currencies, such as the euro.

Yet the single currency's outlook remains murky, dealers said. It risks falling to JPY132.00 and USD1.3850 in the short-term if upcoming U.S. economic data miss forecasts, adding to concern about the global economic outlook and hurting demand for the euro and other relatively risky currencies, they said.

Traders also used recent rises in oil prices as an excuse to buy riskier currencies, saying growing demand for petroleum mirrors improvement in the global economy, analysts said.

The US dollar index lost surprisingly little (-0.2%) given the decent equities performance. EUR dipped to USD1.39 minor support during London, and then bounced to 1.40. Euro zone industrial new orders were weaker than expected. The SNB was said to have intervened again, producing only a brief spike in EURCHF during the London morning.

The British pound fell sharply against the US dollar during European trading, but made some headway in the US trading session thanks to a broad revival in risk appetite. There was no UK economic data on hand, but there were signs of turmoil in the relationship between the UK Chancellor of the Exchequer Alistair Darling and the Bank of England.

Firmer risk appetite lifted the Australian dollar in Asia Friday as analysts tipped rising stock markets to continue steering high yield currencies and bond prices offshore.

Market expectation

The euro is rallying against the dollar and yen on Friday. Traders said a large British bank had bought the euro on behalf of an Asian central bank.

EURUSD eased back ahead of the European open, the correction extending to USD1.4025, currently around USD1.4038. Offers remain in place at USD1.4060/65, a break to open a move toward USD1.4080 (76.4% USD1.4139/1.3888) ahead of USD1.4100/10 and USD1.4140/50. Bids USD1.4025/20, a break may allow for a move to USD1.4000 ahead of stronger interest at USD1.3985/80 and USD1.3955/50.

For EURGBP offers seen placed to that mentioned 21 day M/A line (falling between 7-9 points a day) at stg0.8572, a break to open a move toward stg0.8580 ahead of stg0.8600. Support seen placed at stg0.8550 ahead of stg0.8530/20.

Cable pulled back to USD1.6370 ahead of the European open before picking up fresh demand interest which has taken it back to current level between USD1.6425/35. Offers remain in place toward USD1.6450, a break above to open a move toward stronger interest placed between USD1.6460/70. Stops noted through USD1.6470/75, which if triggered to open a move toward USD1.6500 ahead of stronger area toward USD1.6520. One trader adds that a close above USD1.6470/75 to target USD1.6605. Support USD1.6400/395, stronger toward USD1.6370.

European stocks are seen opening higher Friday, boosted by expected gains in the heavyweight resources sector, although unlikely to muster similar momentum as U.S. counterparts.

On Friday morning, the Commerce Department is anticipated to say that both personal income and personal spending results for the month of May improved by 0.3 percent. That said, traders should be skeptical of the income result: past increases have been purely the result of rising transfer payments, which include retirement, disability, and employment insurance, while wage and salary compensation has either fallen or stagnated since September 2008.

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