Daily Forex Overview

Previous session overview

The dollar gained slightly on the yen but retreated against the euro in Asian-hours trading Monday, as soaring gold futures pressured the greenback against its European counterpart.

At the weekend meeting in Scotland of finance ministers and central bankers from the Group of 20 leading economic powers, attendees agreed to keep massive stimulus measures in place until the global recovery strengthens.

In a report to the G20, the International Monetary Fund cited signs that the dollar is being used as a funding currency for carry trades, which involve borrowing funds denominated in lower-interest currencies such as the dollar and yen and investing in higher-yielding assets denominated in other currencies.

On Friday, the dollar had edged lower against the yen and traded nearly flat against the euro, after a surprise jump in the U.S. jobless rate to more than 10% comforted views the Federal Reserve will stick to a loose monetary policy.

The euro stood at JPY134.53 against the yen compared with JPY133.53.

The dollar was also up slightly against the yen, at JPY90.09 compared with JPY89.96. Asian banks and other players scooped up the U.S. unit early in the Tokyo morning session, dealers said.

On Friday EURUSD traded briefly above the USD1.4900 level as traders shrugged off the disappointing US jobs data to focus on the USD and US FED rates. Without heavy selling in the equity markets the Euro remained firm and closed at the USD1.4850 level.

On Friday Pound fell against the dollar as the US jobs report came in less than encouraging. Investors continued the trend of buying safe-haven currencies with the announcement of negative economic news.

A weaker U.S. dollar and bullish home lending numbers sent the Australian dollar sharply higher in Asia on Monday ahead of all-important jobs data later in the week.

Market expectation

The U.S. dollar is trading lower against major currencies, including the euro and pound, with traders saying the U.S. jobs data has reinforced the greenback's downside bias.

EURUSD trader's note that heavy offers, possibly option related, seen placed from USD1.4970 through to USD1.5000, adding that stops are seen placed through USD1.5010/20.

Despite the disappointing U.S. unemployment number cutting risk appetite, the euro may climb back above the USD1.50 level before year-end, said analysts.

For the rest of the week, dollar-yen may track moves in U.S. long-term interest rates, with some players expecting large-scale Treasury auctions this week to buoy yields to the greenback's benefit, dealers said. Any such rises could send the dollar up to around JPY92.00 later in the week, said analysts.

European stock markets are expected to open higher Monday, with optimism on the up as merger and acquisition activity aids sentiment and the Group of Twenty concluded that global stimulus efforts would remain in place.

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