Daily Forex Overview

Previous session overview

Knee-jerk selling on a reported car bomb blast in Spain added to the euro's weak tone against the yen in Asia Wednesday, as the European currency also was weighed down by coming euro-denominated bond redemption.

The euro fell to JPY133.39 from JPY133.75 and to USD1.4160 from USD1.4180 after several Spanish newspapers reported an explosion in the northern city of Burgos causing several casualties.

The dollar, meanwhile, fell against the yen because the worse-than-expected result of the U.S. two-year Treasurys auction overnight increased player concern about the nation's fiscal health.

Euro hit a 8-week high of USD1.4305 versus the dollar in European morning, it later tumbled to USD1.4130 after the release of U.S. consumer confidence index for July which came in at 46.6 compared to the consensus expectation of 49.0 and the reading of 49.3 in June. The data suggested recovery signs in the U.S. are mixed and consumer sentiment is still fragile and vulnerable due to a difficult job market.

The British pound fell against the dollar as negative data pushed investors into safe-haven currencies. The CBI monthly survey of retail sales showed that a majority of retailers seeing lower sales in the future with a reading of -15, worse than forecasts of -17.

The Australian dollar fell sharply in Asia Wednesday, trading off softer regional equities and a weaker euro, and analysts say another test of key support levels is likely. Leading riskier assets lower was a sharp surge in risk aversion, which traders said could push the Australian dollar even lower as investors opt to take profit.

Market expectation

The yen is gaining on the UK pound, euro and US dollar Wednesday, as investors take a breather from the stock markets.

Traders said euro selling on those reports would likely be short-lived, and sparked by speculators. But the unit will likely remain on a weak tone for now due to the planned euro-denominated bonds redemption Thursday, said analysts.

Australian and New Zealand players were seen selling the euro, probably to adjust their euro holdings ahead of the redemption, some players said.

EURUSD extended lows to USD1.4110 before meeting decent demand interest with rate edging back to currently trade around USD1.4125. Bids confirmed in place toward USD1.4100, with stops now being mentioned on a break of USD1.4100. For now, traders are watching the euro's support at USD1.4100. If breached, a more severe downturn is likely.

European stock markets are seen opening modestly higher Wednesday, as investors regain their poise after Tuesday's consolidation which brought the run of equity gains to a grinding halt.

Most important events of the day