FX Overnight Briefing

Daily Forex Fundamentals | Written by Jyske Bank | Jul 04 08 04:44 GMT |

Financial News - US & Far East

* EUR fell on rate outlook
* Oil hits record above USD 145
* Nikkei edges lower

Today's Main Events

* EUR: German Industrial Orders for May
* EUR: ECB's Liebscher speaks
* USD: Closed for Independence Day Holiday

American Time Zone:

Stocks mostly higher

U.S. stocks on Thursday ended mostly higher in offering a benign reaction to the government's report on employment, which declined only a bit more than expected in June, offsetting worries that the ailing economy is getting worse.

EUR fell on rate outlook

The euro fell the most against the dollar in more than two months after European Central Bank President Jean-Claude Trichet signalled that he may not increase interest rates again. The 15-nation euro also dropped against the pound as Trichet said he has no bias or precommitment following the decision to raise the ECB's main refinancing rate by a quarterpercentage point to 4.25 %.

In mid-afternoon trading in New York, EUR/USD was 1.2 % lower on the day at 1.5694, its biggest one-day drop since April 24.

Oil hits record above USD 145

Oil rushed to record over USD 145 a barrel on Thursday ahead of the U.S. Independence Day holiday, extending a rally that has added 50 % to prices this year.

The U.S. oil settled up USD 1.72 at USD 145.29 a barrel, after earlier hitting an all-time intraday high of USD 145.85.
Far East Time Zone:

Dollar holds gains

The dollar edged up against the euro on Friday, extending sharp gains made the previous day after payroll data came in close to expectations and eased some fears about the health of the U.S. job market and economy.

The U.S. currency also climbed against the euro on Thursday as European Central Bank President Jean-Claude Trichet cooled speculation of more interest rate hikes.

After the ECB raised rates on Thursday to 4.25 % from 4 % in a widely expected move to get record euro zone inflation back under control, Trichet said he had 'no bias' on monetary policy.

EUR/USD edged down to as low as 1.5673 before recovering a tad to 1.5710. It had fallen on Thursday from a high above 1.5900. The dollar was little changed against the yen at 106.75 yen with many traders expecting a quiet Friday as U.S. markets are closed for the Independence Day holiday.

Nikkei edges lower

Japan's Nikkei stock average edged down 0.3 % on Friday, a day after hitting its longest losing streak in more than half a century, with Mitsui & Co and other trading houses making gains after oil hit a record high over USD 145 and exporters adding buoyancy.

Komatsu Ltd climbed after the Nikkei business daily said the earth-moving equipment maker's operating profit is likely to have risen 7 % to about 85 billion yen for the April-June quarter, a first-quarter record, thanks to strong demand for construction equipment in emerging economies.

But with a slew of big events over and U.S. markets closed on Friday for Independence Day, investors were searching for direction and the market was moving more according to share-specific factors than any comprehensive market factors.

Jyske Markets - FX Research
http://www.jyskebank.dk/finansnyt

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