Morning Forex Overview

Daily Forex Fundamentals | Written by Dukascopy Swiss FX Group | Aug 14 09 07:12 GMT |

Previous session overview The euro and dollar fell against the yen in Asia Friday as weak Chinese stocks and lower U.S. long-term interest rates prompted players to sell those units for the Japanese currency. Japanese exporters joined in the selling on a regular settlement day, dealers said, while the dollar came under further pressure ahead of the redemption of U.S. Treasurys on August 17. With the outlook for Chinese share prices remaining grim, the euro and dollar are expected to continue heading southward against the yen, traders said. Short-term foreign exchange market players have recently grown sensitive to movements in Chinese share markets, amid concerns that weaker-than-expected Chinese growth may drag on a global recovery. A slumping Shanghai Composite index, down 2.4% in early afternoon trade, again triggered a selloff in risk sensitive currencies such as the euro. Meanwhile, the dollar stood at JPY95.22 compared to JPY95.36 late Thursday in New York. The greenback had fallen against the yen overnight, after U.S. retail sales data marked a 0.1% drop in July, disappointing expectations for a 0.8% rise. Sentiment remained negative in Asia, dealers said. Euro rose to a one-week high at USD1.4328 against the greenback on Thursday as the euro zone's two biggest economies unexpectedly returned to growth in the second quarter of the year. In Germany, Europe's largest economy, gross domestic product rose surprisingly by 0.3% in the second quarter. The British pound rebounded even though the UK unemployment rate jumped to 7.8 percent during the second quarter, the highest rate in 14 years, up from 7.1 percent during the first quarter. Yesterday, Bank of England in its inflation report indicated that rates will not be raised for some time. A bullish economic outlook from the central bank sent the Australian dollar to 11 month highs in Asia Friday before renewed jitters on the Shanghai stock exchange sparked a bout of profit taking. Market expectation The euro is under some pressure on Friday, as the slump in the Chinese stock markets dents risk appetite more broadly in Asia. EURUSD bids seen placed between USD1.4255/50, a break below to open a deeper move toward USD1.4245/40 with further interest tucked in close behind at USD1.4235/30. Below here and rate can ease toward USD1.4220/10. Asian account offers noted at USD1.4295, with Swiss accounts sell interest seen at USD1.4315 ahead of stops placed on a break of USD1.4320. EURGBP closed in NY at stg0.8618, the rate nudging up to stg0.8622 in early Asian trade (NY high stg0.8623) before easing back to stg0.8604. Rate currently trades around stg0.8618 into early Europe. Offers seen placed from stg0.8622 through to stg0.8630, a break to open a move on toward stg0.8640/45 ahead of stg0.8650/55. Support stg0.8605/00, a break to allow for a deeper move toward stg0.8590/85 ahead of stg0.8575/70. Currency market reactions to data and other events could continue to be rather fickle for some time yet, given the still-rampant uncertainties relating to growth and also the low-liquidity summer environment, Said analysts. Analysts said there's scope for the local unit to resume its climb higher if U.S. consumer confidence numbers due later surprises on the upside. 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.