Dukascopy Morning Forex Overview – Sept 24 09

Previous session overview

The dollar fell against the yen in Asia Thursday due to heavy selling by Japanese exporters for quarter-end settlement, and dealers say the unit may fall further on lingering concern over the U.S. economic recovery.

The greenback stood at JPY90.82 as of 0450 GMT, down from JPY91.32 in New York Wednesday, as Japanese exporters rushed to close their books because the end of the third quarter is nearing, dealers said.

EURUSD rallied to USD1.4845 post FOMC only to meet strong Asian sovereign supply, with the reversal back to USD1.4728 seen as US stock markets turned from positive to negative. System and macro supply continued into early, pre-Tokyo, trade with sales taking rate on to extended lows of USD1.4685. Rate reversed off lows, with Asian sovereign demand providing a lift to USD1.4740 ahead of a short squeeze on to USD1.4754 before model funds began to provide stronger supply, the rate easing to USD1.4710 before edging back to USD1.4730 into early European dealing.

Pound found some solid support across the board as the MPC meeting minutes showed 9-0 votes to keep at current levels of QE and no mention of deposit rate adjustments. EURGBP traded below 0.9000 but could not hold the level into the close as weakness in US Financial’s weighed down on the Pound heavily.

The Australian dollar weakened in Asian trade Thursday as investors unwound long positions ahead of a key event for currency markets, the Group of 20 industrialized and developing nations summit due to begin later in Pittsburgh. Traders are watching for any consensus on implementing further regulation of financial markets or indeed any explicit reference to currency values.

Market expectation

The euro, U.S. dollar and U.K. pound are lower against yen after the Fed’s statement.

Fir EURUSD offers seen placed between USD1.4737/43 (61.8%/76.4% USD1.4754/1.4710) a break above to allow for a move back to USD1.4754. Offers noted to USD1.4760 with stops above, which if triggered to take rate on to USD1.4780/85 ahead of USD1.4800/10. Demand noted back at USD1.4710/00 (61.8%/76.4% USD1.4685/1.4754). Asian traders report that an Asian sovereign was a noted buyer of euro-dollar, Aussie and sterling off lows, book balancing with Bank a noted buyer of dollars Wednesday. Other Asian sovereigns also noted showing demand interest into Europe.

Greenback coming under pressure across the board, pulling dollar-yen down to fresh lows for the day under JPY90.60. Japanese demand into JPY90.50/45 now on the radar, ahead of reported strong demand into JPY90.00 barriers.

For Pound offers remain in place toward USD1.6390, with further sell interest seen dotted up to USD1.6405. Above here and rate can edge on toward USD1.6420/25. Support USD1.6330, more around overnight lows at USD1.6318 through to USD1.6300.

Investors remain bearish on the dollar because they believe sluggish consumer spending may slow the pace of recovery in the U.S economy. They are willing to push the U.S. unit below JPY90, dealers said.

But the greenback may hold above that level this week because speculators are having qualms about selling dollars actively ahead of the Group of 20 nations’ two-day summit in Pittsburgh that will begin later the global day.

Movers & Shakers:

Important levels:

Source: Dukascopy