Daily Forex Overview

Previous session overview

The yen rose against the dollar and euro, bouncing back from Thursday's disappointing Japanese economic-growth revision, after Chinese economic data raised investors' concerns that interest rates would rise.

China's February consumer-price index accelerated from the year-earlier month, to a greater-than-expected pace of 2.7%. Fixed-asset investment, bank lending and industrial-production data also beat most expectations.

The greenback weakened against its Japanese counterpart, falling to JPY90.35 from JPY90.55 in late North American trading Wednesday. The euro slipped 0.1% to JPY123.30.

Thursday, the yen came under pressure after the Japanese government revised fourth-quarter gross-domestic-product growth down Thursday, due to slightly weaker corporate capital expenditures and private inventories. The government also tweaked down a gauge measuring prices to show record-deep deflation.

The Euro was supported from heavy EURJPY buying throughout the day pushing EURUSD to the mid USD1.3650 area. January's German Trade Balance slumped to 8.7 vs. 16.4bn forecast at exports fell heavily even as the Euro weakened.

The British pound took a hit after data showed an unexpected fall in British manufacturing. The Office for National Statistics said manufacturing output fell 0.9% in January in the sharpest monthly decline since last August, confirming the bleak outlook for the country. Data from the National Institute of Economic and Social Research reported Britain's economy grew by a modest 0.3% in the three months to February and expanded by 0.7% since last September.

The Australian dollar moved higher against the Japanese yen but sank against the U.S. dollar Thursday as the addition of fewer than expected jobs in Australia in February and the implications of rising inflation in China weighed on the local currency.

Market expectation

Euro-dollar eased to a low of USD1.3628, then bounced between USD1.3628/50 ahead of the European open before coming under stronger sell pressure that has eased the low to USD1.3625. Rate currently holds toward the fresh low. Support noted at USD1.3625/20 ahead of USD1.3610/05, with stops noted on a break of USD1.3595. Resistance seen placed back at USD1.3660, stronger toward USD1.3680.

The euro and the dollar may decline further later in the day if U.S. weekly jobless claims disappoint, adding to views that the Federal Reserve won't hike interest rates for the time being, dealers said.

GBPUSD demand remains in place around that mentioned low at USD1.4947, a break to expose USD1.4935/30 ahead of USD1.4920. Below here and rate can sink toward USD1.4900 with key support at USD1.4875/70. Resistance seen placed at USD1.4975/85, $1.5000, stronger at USD1.5015/20.

Dealers said the dollar could fall to JPY89.50 and the euro to JPY122.70 if U.S. weekly jobless claims data, due at 1330 GMT, show more people claiming benefits, thereby pushing down share markets.

U.S. jobless claims are likely to have increased by 460,000 last week, compared with a 469,000 rise two weeks before, according to economists.

European stocks are expected to open lower Thursday, as concerns regarding the over-heating of the Chinese economy, alongside a fall in commodity prices, are set to weigh.

Most important events of the day