Daily Forex Overview

Previous session overview

The dollar weakened slightly against the yen and euro in Asia on Friday as Asian market participants sold the U.S. unit to lock in profits following its overnight rise.

In Friday trading, many market participants took profit on the dollar's rise during the overnight trading, pushing the currency down to JPY90.18 at 0450 GMT from JPY90.40 late Thursday in New York. Selling by Japanese exporters, many of whom have sell orders in the JPY90.00-JPY91.00 range, also weighed on the U.S. currency, dealers said.

The greenback also weakened against the euro, which traded up at USD1.4863 compared with USD1.4841. After the euro fell to a one-week low at USD1.4821 overnight, market participants bought back the common currency to take profits, dealers said.

Meanwhile, the euro was at JPY134.03 compared with JPY134.15.

The Dollar Index, which measures the currency's value against six major units including the euro, stood at 75.577 compared with 75.686.

Sterling traded lower against the dollar as Bank of England Governor Mervyn King said yesterday that a weaker currency will help the UK recover from its recession. King also signaled that the central bank's 200 billion pound asset-purchasing program may continue to be extended. The unemployment rate was 7.8% in September, lower than forecast 8.0%.

A reversal in risk appetite on Wall Street continued into Asian trading on Friday, pushing the Australian dollar sharply lower as a thin domestic data calendar next week means dealers will look to equity markets for direction.

Market expectation

The euro is higher against the pound and dollar on Friday on speculation that euro-zone gross domestic product numbers will set up a rebound after the currency's losses on Thursday.

In addition to expected buying by hedge-fund players later in the day, dealers said other short-term-focused investors may also buy back the U.S. unit if a U.S. consumer confidence survey shows an improvement.

If the Reuters/University Of Michigan consumer sentiment index due at 1455 GMT beats expectations for a rise to 72, that could cause U.S. equities to rally, putting upward pressure on U.S. interest rates to the benefit of the dollar, said analysts.

Some traders has noted that the rate is trying very hard to soak up offers, taking out traders attempting to pick the top, adding that reported stops above USD1.4900 could be the initial target interest. Offers seen dotted toward USD1.4900 with those stops above, a break may open a move toward initial resistance at USD1.4910. Through here and rate can edge on toward USD1.4930/35 ahead of stronger interest at USD1.4950. Support USD1.4835/30 ahead of stronger interest toward USD1.4820.

European stocks are expected to open modestly lower Friday, following a weak session on Wall Street and as investors keep to the sidelines ahead of the euro zone third-quarter gross domestic product data due at 1000 GMT.

In Australia the major local talking point will likely be Tuesday's release of minutes from the Reserve Bank of Australia's November policy meeting, which will be read for signs of further rates tightening to come.

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