Daily Forex Overview

Previous session overview

The yen gained moderately against the dollar and euro in Tokyo Tuesday as Japanese players bought the currency for month-end settlement and the half-year's repatriation of their overseas assets for bookkeeping.

But ahead of the Bank of Japan's tankan, a closely watched quarterly business sentiment report, due Wednesday, players are unlikely to make big bets on the yen, dealers said.

For that reason, any further falls in the dollar and euro later in the day will probably hit the floor around JPY95 and JPY134.80 respectively.

On Monday, EURUSD again mostly tracked the price action on the stock markets. European stocks opened in negative territory but investor sentiment improved later in the session. EURUSD trended higher for most of the day and closed the session at USD1.4083, compared to USD1.4056 on Friday evening. This constructive global sentiment persisted in overnight trading and EURUSD is currently traded above the USD1.41 mark.

The British pound fell to as low as USD1.6430 against the U.S. currency after comments from Zhou, however, it rose in tandem with the euro and hit an intra-day high of USD1.6587 in late New York afternoon.

The Australian dollar was stronger in late Asian trade Tuesday supported by a further improvement in risk appetite in global asset markets that weighed on safe haven assets like the greenback. The rally in the Australian currency defied the release of worse-than-expected domestic credit aggregates data that showed business lending slowing to a trickle.

Market expectation

The euro, yen and U.K. pound are higher against the dollar on Tuesday, as forex players look to stock markets for inspiration.

Pound eased off ahead of the European open to USD1.6610 but soon picked up fresh demand interest into Europe. Release of stronger than expected nationwide house price data provided the added boost to spike rate through USD1.6660/65 and on to USD1.6702. Profit take sales eased rate to USD1.6580 before secondary buying lifted it again, taking it on to USD1.6732. Offers seen placed at USD1.6750 ahead of USD1.6800. Bids placed at USD1.6680, USD1.6660/50.

Strong spike higher in cable on housing data has lifted euro-dollar back to USD1.4125, but sales of euro-sterling seen acting as a counter weight. Offers remain in place at USD1.4130/40, a break to open a move toward USD1.4180 ahead of USD1.4200. Support remains between USD1.4100/1.4095, with stops on a break of USD1.4090. Further bids noted toward USD1.4070 ahead of USD1.4055/50.

Players will be watching the U.S. non-farm payrolls report for June due Thursday, dealers said. Economists expect the report to show 350,000 jobs shed in June, compared to a 345,000 contraction in May.

Dealers said any worse than expected result could weigh on share markets, encouraging players to buy the yen, which they consider a safe-haven asset.

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