Daily Forex Overview

Previous session overview

The dollar plunged below JPY85.00 in Asia Friday to a fresh 14-year low, as investors piled into the yen on the view it offers the safest haven amid falling Asian share prices and concerns over global banks' exposure to Dubai debt.

The dollar later rebounded somewhat, helped by a sterner warning from Japan's finance minister about the yen's sharp moves, but traders said market sentiment toward the greenback remains starkly bearish.

In Tokyo morning trade, the dollar slid to JPY84.82, its lowest level since July 7, 1995. As of 0450 GMT, it stood at JPY86.45 from an overnight JPY86.49. The euro also fell to JPY126.93, its lowest since April 29. The Dollar Index, which measures the greenback's performance against a basket of six currencies, was at 75.116 from 75.803 overnight.

Yesterday Euro gave up most of the gains from the topside breakout the day before as risk aversion went through the roof. The unspecified nature of the current crisis is leading to a lot of volatility with many investors searching for clarification of banks exposure to Dubai Debt.

Also Pound was sold aggressively throughout the day from USD1.6700 down to USD1.6500 as the UK banks exposure to Dubai debt hurt FSTE stocks down 3.2%. November CBI Distributive trades were at 13 as forecast.

The Australian dollar fell to its lowest levels in three weeks on Friday as a scare surrounding debt repayments by Dubai sent shudders through regional markets.

Market expectation

Friday is seeing a broad move out of currencies perceived as more risk-sensitive, with the Australian and New Zealand dollars hit in particular, along with the euro. The yen rose to a fresh 14-year high against the U.S. dollar.

EURUSD touched a low at USD1.4830 before meeting demand at the reported support level. Rate currently trades back around USD1.4850. Below USD1.4830 and traders highlights the 55 day m/a coming through at USD1.4820 ahead of stronger support at USD1.4800.

Pound losses extend to USD1.6304 with rate retaining a heavy feel. Support noted toward USD1.6300, with interest extending to USD1.6290 with stops below.

For EURGBP offers remain in place at stg0.9135, a break to open a move toward stg0.9140/45 ahead of stg0.9200/10. Support remains at stg0.9085/80.

The unease is expected to continue and traders await the reaction of U.S. equities to the Dubai reports. Weaker futures markets indicate some selling will be seen early when Wall Street opens again in a shortened post-Thanksgiving session.

Most important events of the day