Wednesday, February 2, 2011

Forex | Morning Overview | 2 February 2011

Forex | Morning Overview | 2 February 2011

Previous session overview

British pound rose to fresh multi-month highs against the dollar in Asia Wednesday, as strong regional equities prodded investors to buy the risk-sensitive currencies. The gains were supported by speculation that rising inflation in the E.U. and the U.K. may lead to nearer-term rate hikes in those areas.

The euro extended Tuesday's sharp gains, touching its highest level against the dollar since Nov. 9, helped by a surge in risk appetite and growing expectations the European Central Bank will be forced to hike interest rates at some point this year to combat rising inflation.

At 0720 GMT, the euro was fetching USD1.3844 against the dollar, from USD1.3829 late in New York on Tuesday, and JPY112.88 against the yen, from JPY112.51.

Stronger Asian bourses Wednesday prompted short-term investors in Asia to buy risk-sensitive currencies such as the euro and pound against the safe-haven dollar, traders said. The gain in equities was led by Japan's benchmark Nikkei Stock Average, which was up 1.9% in late afternoon trade. Read more