Daily Forex Overview

Previous session overview

The euro edged down against the dollar in Asia Wednesday as Japanese players took profits on its overnight rebound, but the common currency could get back on a mild recovery track if euro-zone authorities later temper concerns over the fiscal problems of Greece.

Those concerns have weighed heavily on the euro in recent weeks, but dealers said the European Commission may come out in support of Greece's plans to shrink its budget deficit in an official assessment of those plans due later in the day.

At 0450 GMT, the euro traded down slightly at USD1.3955, compared with USD1.3964 late Tuesday in New York. But it could rise to USD1.4050 later in the day if the European Commission does attempt to swat away some of the euro-negative concern over Greece.

Meanwhile, the dollar was little changed against the yen at JPY90.45 compared with JPY90.37, while the euro also moved little against its Japanese counterpart, trading hands at JPY126.23 compared with JPY126.20. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies including the yen and euro, was at 79.031 compared with 79.000.

The Pound fell ahead of the Bank of England policy decision later this week. The currency is also weighed down by a disappointing fourth quarter UK gross domestic product data and political concerns. A general election in June could result in a hung parliament which would hold back the next government from making decisions needed to tackle UK's large budget deficit.

Stronger risk appetite helped the Australian dollar nudge higher in Asia trade while bonds slipped Wednesday as the focus of dealers turned away from yesterday's surprising decision by the central bank to keep rates on hold and toward retail sales numbers due tomorrow.

Market expectation

Most players are reluctant to enter any major bets before the U.S. non-farm payrolls report for January due Friday, dealers said. That is because any signs of improvement in the labor market could fuel speculation of nearer term Federal Reserve interest rate hikes, buoying the dollar.

Economists expect the data to show no jobs lost in the month, compared with 85,000 shed in December.

As a prelude to Friday's data, players will be watching an employment report from payroll giant Automatic Data Processing Inc. due later in the day at 1315 GMT.

The Reserve Bank of Australia surprised the market with its decision to keep rates steady at 3.75% and traders are now awaiting the sales numbers for guidance on the strength of consumer spending, a crucial component of the RBA's outlook.

EURUSD traders confirm that stronger offers seen placed at USD1.3990, adding that stops seen above. Further stops noted above USD1.4000, some suggest these are mainly seen from USD1.405 through to USD1.4025. Hedge fund sell interest expected to emerge between USD1.4025/35.

For Pound offers seen placed toward USD1.6050 with further interest seen dotted toward USD1.6065 (USD1.6064 50%). Above here and rate can push on toward USD1.6080 ahead of USD1.6114 (61.8%). Support seen placed at USD1.6025/20, USD1.6000.

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