Daily Forex Overview

Previous session overview

The dollar gained against the yen in Asian trading Monday, buoyed by reports of a lifeline for an ailing U.S. specialty finance firm, but it slipped against other major currencies.

With the Japanese markets closed Monday due to the Marine Day public holiday, the greenback remained on its recent mild upswing against the yen, and last traded at JPY94.55 from JPY94.34.

The euro rose against the U.S. dollar and the yen in Asia Monday, as risk appetite soared amid expectations of more positive news during the ongoing U.S. earnings season. The euro, which traditionally rallies when markets are more willing to take on risk, stopped shy of the key psychological level of USD1.4200 against the greenback, which it last hit - very briefly - three weeks ago.

Demand for the euro was boosted by news that CIT Group Inc. (CIT) may be close to securing USD3 billion in last-minute rescue financing from its bondholders, in a deal that should keep the struggling firm - once the largest issuer of small-business loans in the U.S. - out of bankruptcy court.

The British pound fell against the dollar once again on concerns that CIT Group Inc. will go bankrupt which hurt investors' risk appetite. Also hurting the currency was a report from the IMF that said that UK Prime Minister Gordon Brown risks putting further pressure on sterling unless he curbs Britain's budget deficit.

A run up in domestic equities markets combined with light trading volumes propelled the Australian dollar and bond yields higher in late Asian trade Monday. With Japanese markets closed, market turnover remained extremely light however higher-yielding currencies held near the top of recent ranges. Meanwhile, weaker-than-expected wholesale inflation data failed to support domestic bond futures, which plummeted to around three-week lows.

Market expectation

The euro and dollar are gaining against the yen, although the euro and UK pound are seeing good gains against their U.S. rival Monday. However, both the euro and pound may face some daily chart resistance versus the dollar later.

The greenback was likely to continue feeling the pressure against high-yielding currencies in the week ahead, given stability in stock markets and solid underlying demand for riskier assets, said analysts.

EURUSD is easing back from earlier Asian highs. With pullbacks so far running into support area in European dealing. Traders still noting stops on a break of with offers ahead from option accounts and sovereign names.

Early European dealing has seen cable bounce off the area, pressing through the Asian peak and moving on to at writing as the cross makes a show under. Offers reported in cable into, more around /80 with stops above.

Most important events of the day