Daily Forex Overview

Previous session overview

The euro fell against the yen and dollar in Asia Thursday as weak stocks caused investors to shun the risk-sensitive unit, but dealers said it may soon rebound on a lack of supporting factors for the yen and dollar.

The euro fell to USD1.4912 from USD1.4946 overnight in New York, and to JPY132.90 against the yen from JPY133.77. The number of euro-selling investors was small, but the impact of their selling was magnified as flows in Asia were thin, dealers noted.

The dollar also fell against the yen, the strongest unit when the market is in a risk-averse mood, to JPY89.14 from JPY89.44 overnight.

On Wednesday, the euro had advanced against the dollar, but failed to push past USD1.50 as struggling U.S. stocks muted its gains.

Federal Reserve Bank of St. Louis President James Bullard said Wednesday the Fed could keep key short-term fed funds rates at near-zero until early 2012.

The U.K. pound remained lower after minutes from the Bank of England's November monetary policy committee meeting showed members were split three ways on whether to increase the U.K.'s bond-buying program by GBP25 billion. One dissenter voted against any increase and another voted for a GBP40 billion increase, but the majority approved the GBP25 billion expansion.

The Australian dollar weakened in line with wilting investor appetite for risk Thursday as dealers tipped further selling offshore, while interest rate futures cut through resistance levels.

Market expectation

The euro should remain strong also due to the outlook for the global economy and interest rates, dealers added. They believe the Bank of Japan and the Federal Reserve will keep their policy rates low over the coming months, during which time the European Central Bank may signal a near-term rate-hike. Economic growth potential is also more uncertain in the U.S. and Japan, they added.

EURUSD traders flash up that a major Asian sovereign seen providing supply in recent trade, as rate eases through overnight lows at USD1.4903. Earlier reports suggested same name had provided the rate with a lift off lows. Rate trades down to USD1.4896. Support seen placed at USD1.4880 ahead of USD1.4860/50.

Pound breaks under reported support at USD1.6680, extends corrective pullback to USD1.6672. One Swiss bank's morning report has suggested buying dips to the USD1.6670 level. Further demand interest noted toward USD1.6750 with stops below.

EURJPY reported demand at JPY132.40 under pressure as yen crosses continue to trade heavy. Techs are eyeing a move towards the 200-day moving average at JPY132.06, with the Cloud base then seen as key at JPY131.74.

European stocks are expected to open on a cautious note Thursday, as investors search for new drivers amid concerns the year's strong rally may be winding down.

Most important events of the day