Dukascopy Morning Forex Overview – Oct 16 2009

Previous session overview

The yen weakened against the euro and dollar in Asia Friday as firm Asian equity markets and commodity prices prompted speculators to dump the safe-haven Japanese currency in favor of higher-risk units.

The euro rose to JPY136.03 during the morning session, its highest level since August 24, after closing at JPY135.51 in New York late Thursday. As of 0600 GMT, the single currency stood at JPY135.71.

Meanwhile, the dollar rose to JPY90.99, its peak since September 25, helped by recent rises in yields on U.S. Treasuries. At 0600 GMT, the greenback traded at JPY90.96.

The euro dollar pair fell recording a low of USD1.4914 and a high of USD1.4967, having the union currency trading around USD1.4925. Yesterday the pair extended its gains against the green back breaching the USD1.4960 levels then getting back to the USD1.4925 levels.

Regarding the GBPUSD, it is consolidating between USD1.6400 and USD1.6310 recording a low of USD1.6319 and a high of USD1.6398, having the royal pound trading around USD1.6335. The pair extended its gains yesterday as it rallied from the USD1.6000 levels to the USD1.6330 levels.

The Australian dollar was mostly unchanged late Friday, after retreating from an earlier fresh 14-month high. Traders said buying of the Australian dollar against the yen provided the early catalyst for gains, while others cited a front page article in The Australian newspaper on the growing potential for parity with the U.S. dollar.

Market expectation

The euro shows some vulnerability Friday, with some profit-taking seeming likely going into the European session, followed by fresh buying perhaps next week.

Traders said the euro may rise further against the yen and the dollar if U.S. economic data and corporate earnings come in stronger than expected, increasing risk appetite for high-yielding currencies. The single currency’s next upside targets are at USD1.5000 and JPY136.50, they said.

Players’ attention will now turn to U.S. industrial production data due at 1315 GMT to gauge whether the U.S. economy is on its way to recovery.

August’s University of Michigan consumer confidence index due at 1355 GMT and Bank of America’s earnings will also be studied by the market, traders said.

European stock markets are expected to open higher Friday, with investors generally bullish ahead of more corporate earnings figures which, so far, have mostly surprised to the upside and painted a brighter picture of the global economy.

In Australia, the minutes from the RBA’s last policy meeting due Tuesday are likely to further reinforce expectations for more rate hikes.

Movers & Shakers:

GBP/JPY +3.51%
GBP/CHF +2.22%
GBP/USD +1.82%
AUD/JPY +1.71%
USD/JPY +1.67%
EUR/JPY +1.37%
USD/CAD +1.31%
CHF/JPY +1.27%
EUR/CAD +1.03%
USD/SEK +1.00%
EUR/USD -0.29%
EUR/AUD -0.33%
NZD/USD -0.49%
EUR/GBP -2.06%

Important levels:

Support Resistance
EUR/USD
1.4876 1.5001
1.4797 1.5047
1.4751 1.5126
GBP/USD
1.6113 1.6452
1.5888 1.6566
1.5774 1.6791
USD/CHF
1.0108 1.0188
1.0074 1.0233
1.0029 1.0267
USD/JPY
89.758 91.443
88.691 92.061
88.073 93.128

Source: Dukascopy