Daily Forex Overview

Previous session overview

The yen fell against high-yielding units in Asia Tuesday as an upturn in Chinese stocks helped reduce risk aversion, prompting investors to buy back riskier currencies such as the euro.

Although the European Union is slated to hold a summit on Thursday, traders expect the organization to fail to offer detailed plans on how to deal with the fiscal crisis in Greece, Spain and Portugal.

If such an event transpires, growing skepticism about the European economies could drag down local share prices, which would make more players reluctant to take risks and rekindle demand for the safe-haven yen, they said.

As of 0450 GMT, the euro climbed to JPy122.40 from JPY121.97 in New York Monday and to USD1.3691 from USD1.3659.

Elsewhere, the greenback rose against the yen after Federal Reserve Bank of St. Louis President James Bullard said earlier in the day the discount rate the Fed charges banks for emergency loans could go up fairly soon as part of its plans to end its liquidity programs.

The British pound tumbled to 8-1/2 month low of USD1.5535 versus the dollar as broad concerns about sovereign debt highlighted Britain's own grim fiscal position and an ICM Ltd. survey for the Sunday Telegraph newspaper showed the U.K. opposition Conservative party's lead over Prime Minister Gordan Brown's Labour party narrowed to nine points, suggesting the election that must be held by June will fail to produce a clear winner.

The Australian dollar finished slightly higher in Asia trade Tuesday, although continued trepidation about the global economy drove investors into the safety of long-dated bonds.

Market expectation

Dealers say the Japanese unit could make a turnaround in the near term amid lingering sovereign debt worries in euro-zone nations.

EURUSD traders flash up that that a semi officials name was met with sell interest above USD1.3740. Rate currently trades around USD1.3734, off highs at USD1.3744.

The euro-yen has been faring better this morning as more talk of a rescue plan for Greece filters through the market. The euro-yen has rallied steadily overnight and we have seen acceleration as traders from Europe and London join the move. Talk of good resistance waits at the JPY123.30 area; market currently JPY122.99 just off of the recent highs.

For Pound offers seen placed between USD1.5650/60, a break above to open a move toward USD1.5670/75 ahead of stronger area between USD1.5700/10.

European stocks are expected to open lower Tuesday, following a late selloff on Wall Street, where the Dow Jones Industrial Average closed below the psychologically important 10,000 level for the first time in three months.

Market participants are focused on comments from Federal Reserve Chairman Ben Bernanke, who is set to appear before House lawmakers Wednesday.

Most important events of the day