Morning Forex Overview

Daily Forex Fundamentals | Written by Dukascopy Swiss FX Group | Dec 11 09 08:46 GMT |

Previous session overview The dollar and euro rose against the yen in Asia Friday as strong Chinese economic data fueled optimism about the global economic recovery, to the detriment of the safe-haven, low-yielding Japanese currency. The dollar and euro climbed to intraday highs of JPY88.79 and JPY130.73 respectively, after data showed Chinese industrial production rose 19.2% from a year earlier in November. Other Chinese data showed the country's consumer price index increasing by 0.6% in November, the first rise in ten months. Players interpreted that as a positive offshoot of the surging economy, instead of as a reason for concern that monetary tightening could be imminent, dealers said. Also hurting the yen was apparent discord within the Japanese government over plans for government bond issuance for the fiscal year starting in April, traders said. Seemingly conflicting statements about the government's previously stated goal to cap new debt sales at JPY44 trillion in fiscal 2010 highlighted political risk negative for the yen. At 0450 GMT, the dollar stood at JPY88.72 compared with JPY88.21 late Thursday in New York. The euro traded hands at JPY130.66 compared with JPY129.97. Meanwhile the euro stood at USD1.4727 at 0450 GMT compared to USD1.4729 late Thursday in New York. The Dollar Index, which measures the currency's value against six major units including the euro, was at 76.061 compared to 76.011. Sterling stayed steady against the dollar after the Bank of England kept its asset-buying program unchanged at GBP 200 billion and left interest rates at 0.5%. The Australian dollar edged higher in Asia Friday on a better tone in stock markets but in quiet trade as dealers look ahead to important economic and policy releases next week. Market expectation If U.S. economic indicators later in the global day also come in strong, the dollar and euro could rise further against the yen, dealers said. While Japan will benefit from the China boost, deflation is likely to force the Bank of Japan to keep interest rates at rock-bottom levels, dealers said. That encouraged short-term players to sell the yen on the positive Chinese news, they said. For EURUSD bids seen placed to USD1.4700, more toward USD1.4690 with stops said to remain in place on a break of USD1.4680. Stronger demand seen placed on the approach to USD1.4650. Resistance seen placed toward the Asian high at USD1.4740, more at USD1.4760 (NY high) ahead of USD1.4775/85. For Pound support seen in place toward USD1.6260, with stops placed on a break of USD1.6250. If stops triggered to open a deeper pullback toward the recent area of pullback may lows between USD1.6225/15. Resistance seen placed at USD1.6300/05, USD1.6320 ahead of USD1.6334. European stocks are expected to open with modest gains overall Friday, following broadly positive sessions in Asia and the U.S. However, the advance is likely to remain muted until the release of U.S. retail sales data at 1330 GMT. 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.