Morning Forex Overview

Daily Forex Fundamentals | Written by Dukascopy Swiss FX Group | Apr 16 09 07:17 GMT |

Previous session overview The greenback strengthened against most of the major currencies on Wednesday as investors continued to buy the safe-haven U.S. dollar due to persistent worries over the economic recession. The dollar slipped against the yen as China's first quarter growth data failed to match players' last-minute expectations and prompted them to sell the greenback, considered to be riskier than the Japanese unit. The U.S. currency lost more than half a yen to JPY98.92 after China said its gross domestic product rose 6.1% during the January-March period from a year ago - the slowest growth in nearly two decades. Though it was slightly better than the 6.0% growth forecast by economists surveyed by Dow Jones, dealers said currency players had been factoring in a stronger figure in the final hours before the data release. EUR first rallied to USD1.33, then fell to USD1.3170, ending the European session little changed around USD1.3230. ECB's Weber said the policy rate won't be cut below 1.00%, but added any QE measures will be announced in May. The British pound rallied above USD1.5000 against the dollar and touched a multi-month high of USD1.5038 as Royal Institution of Chartered Surveyors showed that the slump in U.K. house prices eased last month after more than a year of declines lured buyers back into the market. The Japanese yen steadied against the US dollar and extended its gains against all of the world's major currencies as reports showed US retail sales and producer prices unexpectedly decreased in March, adding to demand for safety. The Australian dollar was strong late Thursday but well down from its initial session highs after first quarter Chinese economic growth fell short of some bullish market expectations. Against the New Zealand dollar, the Australian dollar remained firm after touching its strongest level since early March at the start of trading Thursday. The Australian dollar was at NZD1.2597 in late trading Market expectation The euro and dollar are both lower against the yen, while the euro dips against its U.S. rival as risk aversion wanes. However, dealers doubt any major moves will emerge in coming hours and predict narrow-range trading and quick profit-taking in the major pairs. EURUSD currently trades around USD1.3185 at writing. Support remains in place to USD1.3170 with a break below to open a deeper move back toward USD1.3150/45. Talk of decent stops below this area, with system and model entry levels also noted should area give way. Below here can expose USD1.3100/1.3090. Resistance seen placed from USD1.3190 through to USD1.3210, stronger USD1.3230. Cable dropped back to an eventual low of USD1.4965 before recovering to USD1.5030/35. Fresh selling emerged to again take rate back to overnight lows but area to USD1.4960 again cushioned the move with rate currently trading back above USD1.5000. Bids remain in place to USD1.4960, with stops noted through USD1.4950. Further demand then noted at USD1.4925/20 ahead of USD1.4900. Resistance seen placed at USD1.5015, more toward USD1.5030 ahead of USD1.5045/50 and stronger area between USD1.5070/80. Stops noted above here and USD1.5130/35 in the background. USDJPY bids in the JPY98.80 area now under pressure as dollar-yen extends the lows into European trade, despite what looks set to be a positive open for European stocks. A break below here can expose a potential deeper correction towards Wednesday's base at JPY98.15. Looking ahead, players will pay attention to U.S. economic indicators and financial firms' earnings reports. Dealers said the greenback could fall substantially on a negative surprise because players have priced in robust figures. If results turn out to be strong, the currency market may not show a big reaction. But in the event of poor results, the greenback could fall below JPY97, analysts said. Dukascopy Swiss FX Group Legal disclaimer and risk disclosure This overview can be used only for informational purposes. Dukascopy SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.