Dukascopy Morning Forex Overview – Sept 30 09

Previous session overview

In the currency markets, the dollar fell back below the JPY90 mark, weighed down by exporters’ sales, while the euro was also lower against the yen but up against the dollar. Dealers said the dollar and the euro were supported by month-end demand from Japanese importers for account settlement, while some players were taking profit on the yen after its recent steep rise.

At 0615 GMT, the dollar was trading at JPY89.73, down from JPY90.09 late in New York Tuesday, while the euro was fetching JPY131.28, down from JPY131.38. The euro was slightly higher against the dollar at USD1.4627, up from USD1.4588.

Other Japanese firms such as financial institutions also sold the dollar to repatriate overseas earnings to settle accounts on the last day of the Japanese fiscal half year, traders said.

U.S. model funds were also selling the greenback for the safer-haven yen, after the U.S. Consumer Conference Board’s consumer confidence index for September fell unexpectedly overnight, dealers said.

The Euro struggled to capitalize on strong Asian stocks as sellers into the USD1.4650 area capped gains and when US stocks turned negative the pair fell to supports at USD1.4550. EURJPY performed well but the big move was on the EURGBP which continues to pull back after recently rallying.

The British pound rallied against the euro and the dollar after a surprise rise in UK retail sales. Data from the Confederation of British Industry showed retail sales in September had its first positive growth since April. The economic woes that resonated throughout the UK for the first half of 2009 was confirmed as Q2 GDP shrank 0.6% as reported by the Office for National Statistics.

The Australian dollar jumped to a 13-month high on Wednesday after a surge in retail sales data fueled the case for rate hikes in coming months. At 0605 GMT, the Australian dollar was quoted at USD0.8808, up from USD0.8753 late Tuesday. Against the Japanese yen, it was quoted at JPY78.93, up from JPY78.82. The currency hit a fresh 13-month high of USD0.8818 late in the session.

Market expectation

The dollar fell against the yen Wednesday as Japanese exporters sold the U.S. unit on a regular settlement day, with dealers expecting the currency to continue edging down for the rest of the day.

Yet dealers said any falls over the next two days would likely be moderate, as players hesitate to push the dollar too far in either direction ahead of the closely watched non-farm payrolls report for September due Friday.

Technical analysts are noting the EURUSD failed to close below the 21-day moving average last night, today seen as pivotal at USD1.4580. Bids said to be forming on the downside at USD1.4530, said to be semi-official in nature. Topside order boards said to be pretty mixed with no clear bias. Attention today now centered around the ECB one-year liquidity tender, due to close at 0900GMT.

Europe’s major stock market indexes are expected to open little changed Wednesday, as investors react cautiously to Tuesday’s disappointing U.S. economic data which weighed on Wall Street and the Asian markets.

Important levels:

Source: Dukascopy