Dukascopy Morning Forex Overview – Oct 15 2009

Previous session overview

The euro rose to a fresh 14-month high against the dollar in Asia on Thursday as hawkish comments by Reserve Bank of Australia Governor Glenn Stevens and strong Asian shares fueled appetite for riskier currencies.

Governor Stevens said early in the Asian morning that the Aussie dollar is being supported by the nation’s economic outperformance compared with its global peers. U.S. and European short-term investors took the comment as a cue to take risk and bought higher-yielding currencies, dealers said.

The euro climbed to a high of USD1.4967, its highest level since Aug. 13, 2008, compared with its level in late New York hours of around USD1.4910. The Dollar Index, which gauges the currency’s value against six majors including the euro, declined to 75.21, also a fresh 14-month low.

The Pound also took advantage of a weaker USD and further by positive readings in UK unemployment which was steady at 7.9%, however Jobless claims only rose by 20.8K, the smallest rise since May 2008.

The Australian dollar surged to fresh 14-month highs Thursday buoyed by signals from the Reserve Bank of Australia that interest rates will continue rising over coming months.

Market expectation

As risk appetite grows, the yen and dollar are taking losses against the euro and U.K. pound Thursday.

Strength in equities reflected by the break suggests the euro and risk-sensitive currencies, such as the Canadian and Australian dollars, can continue their appreciation against the greenback, analysts said.

European stocks are expected to open higher Thursday, supported by fresh confidence in the global economic recovery as the third quarter earnings season proceeds.

EURUSD found the impetus to move above Wednesday highs at USD1.4948 to take out suggested barriers at USD1.4950, the move peaking in Asia at USD1.4961. Further demand into early Europe has extended move to USD1.4967. Offers are reported in place from around USD1.4970, with further interest seen positioned ahead of option barriers at USD1.5000. Support at USD1.4920. GS and Citi Q3 earnings are in focus, along with EZ and US inflation data.

GBPUSD early Europe take rate up to USD1.6116 but offers placed ahead of USD1.6120 so far able to counter the early upside pressure. System stops, as reported in a recent bullet (0249EDT), placed on a break above. However, technical traders suggest that area between USD1.6125/35 should provide some resistance. Further offers noted toward USD1.6150 ahead of USD1.6180. Support seen placed at USD1.6080/70.

Traders said the euro could reach USD1.5000 and JPY134.00 later in the day if U.S. economic data and earnings reports slated for release later in the global day prove good, lifting U.S. stocks further.

Some traders expected markets to remain buoyant despite a slew of U.S. earnings reports and data on the slate for later Thursday.

Movers & Shakers:

Important levels:

Source: Dukascopy