Daily Forex Overview

Previous session overview

The euro fell to a one-week low against the yen in Asia on Wednesday as weak regional share prices prompted investors to decrease their holdings of the risk-sensitive unit.

The common unit fell below JPY135.00 for the first time since Oct. 20 and other high-yielding units also declined against the yen. These currencies usually weaken when risk appetite deflates.

At 0450 GMT, the euro was at JPY134.99 from JPY135.88 in New York on Tuesday. The New Zealand dollar was at JPY67.23 from JPY68.33, while the Australian dollar was at JPY82.84 from JPY84.13.

In the European foreign exchanges Wednesday, the euro regained some ground against the dollar, with the single currency at USD1.4826 at 0730 GMT, up from USD1.4804 late in New York Tuesday.

Pound opened Asia around USD1.6378 with rate influenced by the early CPI react rally in Aussie, edging to an early high of USD1.6406.Rate reversed off highs, the move down seen in line with Aussie as both Aussie-yen and sterling-yen came under pressure out of Tokyo, cable pressed to lows of USD1.6338, though traders reported that pound continues to enjoy an underlying buoyant tone, though just off recent pullback lows of USD1.6251, seen after last Friday's release of poor UK GDP.

The Australian dollar was lower late Wednesday in Asia after inflation numbers failed to prove the case for an aggressive ramp up in monetary policy tightening by the central bank. 

Market expectation

Analysts suggested the euro might be able to rebound from the lows touched Tuesday.

For EURUSD offers seen placed between USD1.4840/50, a break above to open a move toward USD1.4865/70 ahead of USD1.4900, though one Asian trader has noted that funds have been more than willing to sell into the ACB inspired recovery. Support now seen placed back toward USD1.4800, with stronger interest noted between USD1.4770/60. A break here to USD1.4740 with stops placed on a break below. Further demand USD1.4725 with talk of short entry sell orders placed on a break below. Traders suggested that the break of USD1.4760 exposes USD1.4680.

For Pound offers remain in place between USD1.6380/85,a break above to open a move back toward USD1.6400/05. Support USD1.6335/30, a break to allow for a retest of Tuesday's pullback area between USD1.6315/10 ahead of USD1.6295/85 area. Stops noted below USD1.6280, which if tripped to expose recent pullback lows of USD1.6251, with bids seen to USD1.6250.

In Australia core third quarter inflation at 0.8% from the previous quarter was marginally firmer than the forecast 0.7%, analysts said the price rises won't be enough to push the Reserve Bank of Australia into tightening more than an anticipated 25 basis points at next week's meeting.

Investors will pay attention to stock price movements and any central bank comments that give hints about future policy, analysts said.

European stocks are expected to open lower Wednesday, with a weak session in Asia weighing on the markets as investors look to profit from this year's rally. 

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