Currency Markets – Review Of Trading Session
The US dollar is generally stronger against its major rivals early Wednesday in the midst of an unsettled global risk environment, though its gains are widely seen as fragile and prone to potential reversal. fter falling overnight to a succession of new multi-month lows against currencies such as the UK pound and the Canadian dollar, the US dollar enters North American trading on a firmer footing owing to moderately higher levels of global risk aversion. Some of the more cautious market environment is attributable to North Korean sabre rattling over international responses to its recent series of nuclear and missile tests. North Korea earlier on Wednesday threatened military action against South Korea if a U.S. led operation to contain weapons of mass destruction results in the interception of any North Korean vessels. News of escalating tensions on the Korean peninsula has tended to reaffirm the dollar’s safe haven status and has also weighed on the Japanese yen. Besides geopolitical factors however, other typical indicators of global risk sentiment are in better shape Wednesday, as most major Asian and European equity markets have posted gains. In the London session, the euro was at USD1.3946 from USD1.3983 late Tuesday, while the dollar was at JPY95.09 from JPY94.9. The euro was at JPY132.62 from JPY132.81. The pound was at USD1.6022 from USD1.5928, while the dollar was at CHF1.0853 from CHF1.0846.
Currency Markets – Market Outlook
The afternoon and evening session follows the existing home sales figures, as well as the Treasury’s latest 5-year bond auction later in the day, with the US dollar having lost some ground in early trading against all major currencies as traders chase around a rumor of dollar negative comments from a US official, although traders say they are unable to track down the remarks. The UK pound has broken back above USD 1.6000, moving through suggested resistance levels to currently trade around USd1.6020/25. Momentum stalls in this area but underlying tone remains firm, traders say. The next band of resistance seen placed between USD1.6040/50 (earlier rally high and tech target respectively). Suggestions continue that USD1.6050 holds barrier interest, though no confirmation has been seen from normal good sources. The dollar yen dropped below JPY95.00 toUS trade under JPY94.70 as the US dollar took a hit on unsubstantiated talk of official, dollar negative, remarks.
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