Currency Markets – Yesterday & Overnight Asia

The euro rose against the US dollar and Japanese yen in Asia Friday, as firm Asian stocks and higher crude oil prices led short term investors to buy riskier currencies, such as the euro. Yet according to many currency traders, the single currency’s outlook remains uncertain against other major currencies. It risks falling to 132.00 against the yen, and 1.3850 against the US dollar in the short term, if upcoming U.S. economic data misses forecasts, adding to concern about the global economic outlook and hurting demand for the euro and other relatively risky currencies.
Traders are now suggesting that recent rises in oil prices have been one of the drivers to buying riskier currencies, saying growing demand for petroleum mirrors improvement in the global economy.

The US dollar index lost surprisingly little (-0.2%) given the decent equities performance. The euro dipped to 1.39 yesterday, with minor support during London, and then bounced to 1.40 with Euro zone industrial new orders were weaker than expected. The Swiss National Bank was said to have intervened again, producing only a brief spike in the euro vs chf during the London morning trading session. The British pound fell sharply against the US dollar during European trading, but made some headway in the US trading session thanks to a broad revival in risk appetite. There was no UK economic data on hand, but there were signs of turmoil in the relationship between the UK Chancellor of the Exchequer Alistair Darling and the Bank of England. Firmer risk appetite lifted the Australian dollar in Asia Friday as analysts tipped rising stock markets to continue steering high yield currencies and bond prices offshore.

Currency Markets – Outlook London Session

The euro is rallying against both the dollar and yen in early trading this morning, with many currency traders suggesting that a large British bank has bought the euro on behalf of an Asian central bank. The euro vs dollar eased back ahead of the European open, the correction extending to 1.4025, and currently trading around 1.4058. Offers remain in place at  1.4060/65, a break above here could open a move toward 1.4080 (76.4% USD1.4139/1.3888) ahead of USD1.4100/10 and USD1.4140/50. Bids USD1.4025/20, a break may allow for a move to USD1.4000 ahead of stronger interest at USD1.3985/80 and USD1.3955/50.

For the euro vs pound offers seen placed at 0.8572, a break above to open a move toward 0.8580 ahead of 0.8600. Support is seen placed at 0.8550 ahead of 0.8530/20.

Cable pulled back to 1.6370 ahead of the European open before picking up fresh demand interest which has taken it back to the current level between 1.6425/35. Offers remain in place toward 1.6450, a break above to open a move toward stronger interest placed between 1.6460/70, with a possible re-test of the strong resistance in place at 1.66 longer term. A break above here would open further bullish momentum in the pair. Stops noted through 1.6470/75, which if triggered could open a move toward 1.6500 ahead of stronger area toward USD1.6520.

European stocks are seen opening higher Friday, boosted by expected gains in the heavyweight resources sector, although unlikely to muster similar momentum as U.S. counterparts.

On Friday morning, the Commerce Department is anticipated to say that both personal income and personal spending results for the month of May improved by 0.3 percent. That said, traders should be skeptical of the income result as past increases have been purely the result of rising transfer payments, which include retirement, disability, and employment insurance, while wage and salary compensation has either fallen or stagnated since September 2008.

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.

Currency Markets – Trading Yesterday & Overnight

The euro rose slightly against the yen and dollar in quiet Asian trading Friday as regional stocks ticked up, encouraging speculators to buy back riskier currencies such as the European currency. However many traders were suggesting last night that the gains seen in the euro were too small to be meaningful, and as a result most currency players were staying on the sidelines ahead of the weekend. Even so,  some investors took a cue from rising Asian stocks to buy the euro against the less risky but lower yielding Japanese yen and US dollar, with the euro climbing a third of a yen to 134.55 from New York overnight, while gaining a third of a cent against the US Dollar to trade at 1.3921.

On Thursday, the euro vs dollar maintained an almost perfect sideways trading range, oscillating between 1.3900 and 1.4000,during the  European trading session. The better than expected Philly Fed survey pushed stocks higher with the euro vs usd  testing offers in the 1.40 price area. However, there was no follow through, and the pair gave up much of its gains later in the session despite stocks holding up  well, with the pair dropping temporarily below the 1.39 mark.

In the UK, the British pound fell against the dollar and hit a one week low against the euro, after data showed UK retail sales unexpectedly fell, raising doubts about the ‘hoped for’ economic recovery. In recent weeks sterling had surged on expectations that the UK economy would quickly emerge from its deepest recession in decades, however yesterday’s data raised severe doubts, with  UK retail sales falling 0.6% in May, against a forecast of a 0.4% gain, 1.6% lower than last May.

The Canadian dollar edged higher against the U.S. dollar after domestic inflation data showed annual inflation slowed in May but was still higher than market expectations.

The Australian dollar enjoyed a boost in Asia Friday, helped by an improved risk appetite and weaker U.S. dollar, while interest rate futures plunged on rising oversupply concerns.

Currency Markets – Trading Outlook This Morning

The euro is slightly higher against the dollar, yen and pound on Friday as markets see a slight up tick in willingness to build exposure to risk. Currency traders are suggesting that the major currency pairs are showing some flows into risk exposure after surprisingly strong U.S. economic news raised hopes that the economic recovery may be taking root in America. The single currency’s short term outlook rests on events next week, such as the two day Federal Open Market Committee meeting starting on Tuesday and the release of  key U.S. economic data later in the week. If these numbers are weaker than expected, boosting demand for safe currencies like the US dollar and the yen, then the euro could fall to 130.00 against the yen, and to 1.3700 against the US dollar in the near-term. According to many traders, there is now a feeling in the market that the euro is indeed overbought, and therefore vulnerable to profit taking.

For the euro dollar, traders are reporting decent offers placed towards 1.3950 (USD1.3952 61.8% USD1.4002/1.3872), with the rate currently trading around the 1.3916 region. Stops noted through USD1.3955, which if triggered could open a move toward USD1.3970/75 ahead of a stronger area above 1.4000. Support is seen at 1.3910/00, and a break below could open a deeper move back toward overnight Asian lows at USD1.3883 with bids noted from this level extending toward the NY base at 1.3872.

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.