Forex | Afternoon Overview | Ben Bernanke Fed Speech | 9 February 2011

Forex | Afternoon Overview | Ben Bernanke Fed Speech | 9 February 2011

Previous session overview : The euro dipped sharply across the board in European trading hours Wednesday after reports that Deutsche Bundesbank President Axel Weber will not be a candidate to replace Jean-Claude Trichet as president of the European Central Bank.

The reports sent the 17-country currency lower against the dollar, yen and pound, as Weber is famously tough on inflation, and was widely considered as the most likely candidate to succeed Trichet when his contract expires at the end of October.

Deciding Trichet's successor is the responsibility of euro-zone heads of government, who are currently engaged in a wholesale reform of the governance of the single currency area.

The dip in the euro breathed life into an otherwise quiet trading session in Europe, which saw the dollar firm against the safe-haven yen and Swiss franc after a sharp rally in U.S. Treasury yields boosted the buck.

The euro is at USD1.3696 in morning trading in New York.

The U.S. dollar was also higher against the Australian dollar, while trading little changed against the other commodity-linked currency of Canada.

The Canadian dollar is slightly higher in subdued early trading Wednesday as markets wait for congressional testimony from U.S. Federal Reserve Chairman Ben Bernanke later in the morning in the absence of any domestic market movers. The U.S. dollar is at CAD0.9948 from CAD0.9955 late Tuesday.

Market expectation : The euro is up against the dollar, but movements are constrained by Fed chairman Bernanke's speech later in the day and uncertainty surrounding a potential replacement for ECB president Trichet when his term ends later in the year. For now, the euro is likely to hold in a range as news of what the central banks might do plays out. Analysts say near-term support lies around USD1.3539, which is the 100-day moving average. Resistance is at USD1.3811, the open from Feb. 3. Read more

Forex | Afternoon Overview | 7 February 2011

Forex | Afternoon Overview | 7 February 2011

Previous session overview : The euro's slide against the dollar extended into a new week Monday after a disappointing German economic report.

Losses accelerated after the common currency fell through the key 100-day moving average around USD1.3530, triggering additional sell orders.

Traders in the past few days have begun unwinding long positions they built up in the euro during January, adding to the losses in recent days.

The currency fell to a two-week low Monday against the dollar after release of news that German manufacturing orders fell by 3.4% in December; more than double the 1.5% decline in orders that forecast.

Trichet backed off previous comments late last week, saying the euro zone's interest rates were currently at proper levels. That disappointed market participants who had been building in expectations that the central bank would hike rates to combat coming inflation. Last month, Trichet sounded hawkish and hinted at future rate hikes, leading to a steep rally in the euro.

The euro was at USD1.3512 in morning trading in New York from USD1.3582 late Friday. The euro dropped as low as USD1.3508 earlier in the day, its lowest level since Jan. 21.

The euro was at JPY111.57 from JPY111.67 late Friday, while the dollar was at JPY82.35 from JPY82.20. Read more

Forex | Morning Overview | Non-Farm Payrolls | 4 February 2011

Forex | Morning Overview | Non-Farm Payrolls | 4 February 2011

Previous session overview

The dollar edged down against the yen in Asia Friday as Japanese exporters sold the U.S. currency for regular settlements, and as some short-term investors trimmed bets on the unit ahead of a key monthly U.S. jobs report.

Comments from Minneapolis Federal Reserve President Narayana Kocherlakota, reported in morning trade in Tokyo, added to the view that the central bank won't tighten monetary policy anytime soon.

At 0450 GMT, the dollar was down at JPY81.58 from JPY81.62 late Thursday in New York. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies including the yen, was at 77.763 from 77.772.

The Australian dollar, meanwhile, rose to one-month highs against the dollar and the yen after the Reserve Bank of Australia signaled that catastrophic floods in December and January hadn't damped its otherwise buoyant outlook for the commodity-rich Australian economy.

The central bank's statement sent the Australian currency to USD1.0196, its highest since Jan. 3. Against the yen, it rose to JPY83.19, its highest since Jan. 6. At 0450 GMT, it was at USD1.0184 from USD1.0146 late Thursday in New York, and at JPY83.09 from JPY82.83.

Elsewhere, the euro was at USD1.3632 at 0450 GMT from USD1.3633 late Thursday in New York. Against the yen, the common currency was at JPY111.22 from JPY111.28.

The Pound is also lower this morning on broad USD strength, but its drop has been far more moderate than that of its mainland European counterpart. Strong economic data out of the UK has provided support for the GBP with PMI Services beating expectations of 51.3, registering an impressive 54.5. With all three components of PMI (manufacturing, construction, and services) showing strong signs of expansion, investors have begun to give credence to the growing faction of BoE members calling for a hike in interest rates.

Market expectation

If the non-farm payrolls data for January due at 1330 GMT come in weaker than expected as the December report did last month the greenback could fall below the JPY81 mark, analysts and dealers said.

Dealers said attention is now squarely on the U.S. payrolls. Any worse-than-expected result will likely exert a bigger impact than if the reading exceeds expectations, they said. The forecast for the report to show 136,000 jobs added in January, up from 103,000 added in December.

The USDCHF has breached its technical resistance at 0.9486 exposing upside potential to the 20-day moving average of 0.9551, according to technical analysts. The pair has reversed just ahead of the low 0.9300 area, and this is encouraging. It has eroded the 0.9486 resistance and look for gains to 0.9551, and then the 55-day moving average at 0.9651, analysts note.

European stocks are expected to open higher Friday, after a firm close on Wall Street, with sentiment positive ahead of the U.S. employment report. Read more

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