Dukascopy Afternoon Forex Overview – Sept 28 09

Previous session overview

The U.S. dollar is moderately higher against most currencies Monday morning as investors remain apprehensive about the global economy and riskier assets, with the Japanese yen the only major currency able to advance against the greenback.

The dollar has pared its gains against most major currencies in North American trading as stock futures point to a positive opening of U.S. exchanges.

The yen is well off its overnight highs as traders digest remarks from Japanese Finance Minister Hirohisa Fujii and try to get a focus on the country’s stance on currency intervention.

Earlier Monday, the finance minister said the recent USDJPY trend is “not abnormal,” suggesting the government won’t step into the market to curb the yen’s rise.

But later in the day, Fujii toned down his pro-strong-yen rhetoric in a seminar, saying that “The temporary movements (in the yen against the dollar) at present are a little one-sided.”

The market looks set to test Fuji’s anti-intervention credentials with some traders now looking for the dollar to fall as far as JPY82.

The dollar dropped as low as JPY88.23 in overnight trading, but had recovered to JPY89.64 in morning trading from JPY89.76 late Friday.

The Canadian dollar is marginally lower Monday morning as it also suffers from the general strength of the U.S. dollar and the broad concerns about risk. The U.S. dollar is trading at CAD1.0933 from CAD1.0924 late Friday.

Market expectation

EURUSD has drifted lower for trade to USD1.4630 but it is only a drift, traders emphasizes, flows remain very light. Some mention of intra-day stops sub USD1.4625.

EURGBP prop demand for the cross and UK clearer sterling supply allows the rate to make a show above stg0.9250, extending the recovery off early European lows under stg0.9200. Light offers now noted at stg0.9260 and stg0.9280, ahead of the Asian highs at stg0.9304.

CAD, like most other major currencies, is suffering somewhat from broad USD strength Mon morning, although a recent shift towards an interest in risk reflected in higher US stock futures has helped pull USD off its session high at CAD1.0989, also its highest level since Sept 4. Analysts say pullbacks to support at CAD1.0905 and CAD1.0850 are expected to attract short-term buying interest for an attempt to test resistance at CAD1.1059.

Overall risk sentiment remained the key driver in currency markets, with a shift higher in U.S. stock futures helping the euro and other risk currencies retrace some of their losses against the dollar in North American trading.

Movers & Shakers:

Important levels:

Source: Dukascopy