Daily Forex Overview

Previous session overview

The euro Wednesday gave up most of its early gains against the dollar and the yen as weak Japanese shares prompted speculators to sell it for the safe-haven U.S. and Japanese currencies.

Early in the day, the European currency climbed as high as USD1.4890 and JPY133.00, boosted by higher crude oil and gold prices, which often benefit the euro, as they makes investors less risk-averse.

But the Nikkei 225 Stock Average's fall into negative territory prompted traders to unload euros. Around 0530 GMT, the Nikkei was down 0.8%.

The euro was at JPY132.70 as of 0450 GMT, down from JPY132.84 late Tuesday in New York.

Meanwhile, the U.S. unit declined slightly against the yen to JPY89.17, from JPY89.30 in New York overnight, as traders bought the yen with currencies such as the Australian dollar and the euro, which involves selling of the U.S. dollar in the process.

Yesterday the euro weakened against the dollar, but managed to pair some its losses still holding below the key psychological level of USD1.50 after European Central Bank President, Trichet stated that a strong dollar is important for the international community.

Yesterday the pound fell against the dollar, but pushed to a two-month high against the euro after a jump in UK inflation fueled speculation the Bank of England may be nearing the end of its quantitative easing program.

The Australian dollar was lower late Wednesday in quiet Asia trade as dealers look to offshore equity and commodity markets for near term guidance. Profit taking weighed the local unit through the session, with traders reporting good selling from local banks around the USD0.9320 level.

Market expectation

Major currency pairs are narrowly mixed Wednesday, caught between slightly increased risk aversion, which was U.S. dollar positive, and expectations that the Federal Reserve would maintain its ultra-low rate policy for an extended period, a negative for the dollar.

EURUSD makes the push above USD1.4900, as early market joins earlier reported Asian sovereign demand, targeting reported stops above the figure. Rate trades to USD1.4903 but seen meeting profit take supply following the pressured move. If rate can build seen allow for a move on toward USD1.4910/15 ahead of USD1.4930/35.

As long as the euro stays above USD1.4820, it is likely to remain on its upward trajectory, though that trajectory weakened slightly on Tuesday, said analysts.

Pound hearing of further supply hitting cable, the rate easing below USD1.6800, to USD1.6795 but rate seems to be soaking up the supply reasonably well. Rate edges back to USD1.6800 at writing. Support seen placed at USD1.6785/75 ahead of USD1.6755/50. Resistance seen placed at USD1.6840/50, USD1.6870/80.

Traders said the market will be watching the Bank of England's November conference minutes due at 0930 GMT, and the U.S. October consumer price index and housing starts, both slated for a 1330 GMT release. If these paint a more bullish picture of the global economy, that could lift the European currency, traders said.

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