Daily Forex Overview

Previous session overview

The yen rose slightly against the dollar and euro in Asia Wednesday as short-term players bought the safe-haven Japanese unit on renewed concern that U.S. lender CIT Group Inc. may go bankrupt, hurting the U.S. economy.

Short-term investors responded by pushing the U.S. unit down to JPY93.60 in the Asian session from JPY93.66 in New York late Tuesday. The euro also slid to JPY132.93 from JPY133.01.

On Tuesday, the euro reached its highest level in seven weeks at USD1.4278 and then retreated to end lower against the dollar, after risk-sensitive currencies in general reversed direction and ceded ground to the greenback. Technical factors, including the market's reluctance to push major currencies out of recent ranges, also played a role in the euro's reversal Tuesday.

The British pound fell against the dollar after the UK's budget deficit climbed to its highest level since records began in 1993. The budget shortfall climbed to USD21.4 billion in June, which beat forecasts of a climb to USD25.5 billion, but fueled concerns that the government will struggle to find buyers for its assets.

The Canadian dollar rose to its highest level in more than five weeks against the dollar after the Bank of Canada left its key interest rate at a record low 0.25%.

The Australian dollar was stronger late Wednesday as risk appetite continued to surge and domestic inflation data helped water down expectations of more interest rate cuts.

Market expectation

The euro is continuing its retreat Wednesday, along with the UK pound, as worry about risk reappears.

Market participants will continue to watch how the crisis surrounding CIT develops. They'll also scrutinize earnings reports due later in the global day from Morgan Stanley, Wells Fargo, the Bank of New York Mellon Corp. and U.S. Bancorp to measure the state of the U.S. financial sector.

The dollar could fall to JPY92.80 and the euro to JPY132.00 if those reports disappoint investors or concern over a potential CIT bankruptcy grows, dealers said.

Euro-dollar edged back above, dipping to ahead of the European open before getting another lift on to. Offers seen placed to /30 with talk of stronger interest placed toward. Traders also note that and hood strikes of decent sized option expiries for today's NY cut and could act to keep rate close by. Above and further offers noted toward. Bids seen from through to, with further interest noted toward.

Pound traders flash up that reserve name buying seen around the level. Rate has come under early pressure into European dealing, breaking under support at /80 to trade down to lows of . Rate currently seen holding above the mentioned reserve name buying.

European stocks are expected to open marginally higher Wednesday, as the gains generated by positive earnings data are set to continue but at a lesser pace as investors pause for breath.

Most important events of the day