Dukascopy Afternoon Forex Overview – Sept 30 09

Previous session overview

The dollar is broadly weaker Wednesday in New York, as improving European economic data overnight boosted the euro and profit repatriations boosted the yen.

A better-than-expected U.S. second quarter gross domestic product report released as morning trading got underway gave the euro a slight boost, but potential gains may have been tempered by a worse-than-expected ADP jobs survey earlier Wednesday, which showed more jobs lost than had been forecast.

Meanwhile, the Swiss franc dropped sharply against other major currencies, prompting fresh suspicions that the Swiss central bank may be intervening in the market to crimp its recent strength.

USD is broadly lower in early morning trading as positive overnight European economic data lifted EUR and end-of-month profit repatriations are boosting JPY. In early New York trading, EURUSD was at USD1.4662 from USD1.4573 late Tues. USDJPY was at JPY89.53 from JPY90.19. GBPUSD was at USD1.6093 from USD1.5946, while USDCHF was at CHF1.0286 from CHF1.0369.

The Australian dollar hit a 13-month high in overnight trading, to USD0.8836, and remains stronger against the dollar into the New York session. Australia reported a strong rise in retail sales, while the Reserve Bank of New Zealand published a bright economic outlook.

Market expectation

The euro looks again to be ready to resume its upward trend after its September rally was snapped late last week as a wave of caution swept over markets, analysts said, especially if positive global economic data continue to support risk appetite.

EURUSD eases slightly lower for trade to USD1.4595 area now as upswing in dollar-Swiss on suspected SNB intervention to sell CHF keeps dollar and euro-Swiss bid. Traders recalling that talk circulated on each of the previous two ECB LTRO days and thus some are skeptical of intervention vs a “drive-by,” though the cards and evidence seem to be falling in favor of the intervention story. Euro find light bids around USD1.4570.

EURCHF has peaked just ahead of CHF1.52 and will need another nudge from the Swiss authorities to get above here says traders. If that does happen the September high of CHF1.5235 is the next target, if not, then a slide back toward CHF1.51 will likely be followed.

Movers & Shakers:

Important levels:

Source: Dukascopy