Currency Market – Overnight
The US dollar rose against the yen in Asia Thursday following speculation that Japanese institutional investors will buy significant quantities of foreign assets, which in turn prompted overseas investors to sell the yen. Sentiment turned against the Japanese yen versus the dollar earlier in the week, when currency traders and investors failed to push the US dollar back below the technically important 93.50 price level. In addition, Japanese trust funds’ scheduled purchase of overseas assets this week prompted non Japanese investors to buy back the dollar, according to many traders, however a sustained hold above the $97 level seems increasingly unlikely as Japanese exporters have already placed dollar selling orders around this level, and this coupled with lingering doubts about the U.S. economy are keeping US dollar bullish sentiment in check.
Having said that, the US dollar received a boost after Moody’s confirmed on Wednesday that its U.S. triple A rating is safe, citing the country’s diverse and resilient economy, strong government institutions and high per capita income as key factors in the decision.
In Europe, the Euro struggled at the USD1.4000 level before falling heavily in the final hours of the day on the back of increasing US yields. The pair fell to USD1.3850 but the expected support failed to appear and the slide continued into Thursday. Also hurting the sentiment was a FDIC report with a negative outlook on US loan quality. German CPI fell to 0.0% on a y/y basis. The UK pound traded at its highest level since last November supported by improving housing data and optimism that the worst of the financial crisis is over, with business economists expecting the US recession to end in the third quarter, even as unemployment continues to rise.
The Australian dollar was weaker in Asian trading late Thursday as surging Treasury yields triggered fears about the impact of rising U.S. government debt on the global economy.
Currency Market – This Morning
In the Japanese market, currency traders expect to see dollar buying which may lift the dollar yen currency pair to the 97.00 price point later in the trading session, with many traders now focusing on equity markets and developments regarding troubled car giant General Motors. The euro and dollar are rallying against the yen, but the dollar in turn is higher against both the euro and U.K. pound. Currency dealers feel that investors are once again turning to the dollar again as protection against risk. The euro could see accelerated selling this morning with a fall under USD1.3800, while the pound has stiff resistance around USD1.60 for now, which seems to be proving a strong barrier to any move higher.
For the euro dollar offers remain in place around USD1.3840, stronger between USD1.3850/55 with stops above USD1.3860. Support remains toward USD1.3790, with interim interest seen building again around USD1.3800. Stops noted through USD1.3785, which if triggered opens a deeper move toward USD1.3765. For the UK Pound offers remain in place around USD1.5950/55, a break above to open a move back toward USD1.5975/80. Support seen placed from around USD1.5910, with interest extending to the overnight base at USD1.5899. Further demand seen placed at USD1.5885/80 with stops below.
You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links. I have also included details on an excellent ECN broker.
