Dukascopy Afternoon Forex Overview – Oct 1 2009

Previous session overview

The dollar is stronger in early Thursday trading, as concerns over a global economic recovery continue to reduce risk appetite.

Modest gains in U.S. personal income and spending were offset by a worse-than-expected weekly jobless report, leading the euro to hit an intraday low against the dollar before retracing some of its losses.

Overnight comments by a European Union official had sparked a sell-off of the common currency.

The euro got a hard knock at the European opening after EU Economic and Monetary Affairs Commissioner Joaquin Almunia said the euro group will be discussing the euro’s appreciation to prepare its position ahead of the G7 meeting in Istanbul this weekend.

That prompted a sharp sell-off pushing the euro back under USD1.46.

Wednesday, currency traders mostly ignored disappointing U.S. data and sinking equities, sending the euro and other high-yielding currencies higher. The Australian dollar hit a 13-month high. Comments from Federal Reserve officials analysts interpreted to indicate loose monetary policy would remain well into next year overrode concerns over an economic recovery.

Market expectation

The market Thursday is waiting for other key U.S. economic indicators ahead of Friday’s September non-farm payrolls number, considered a key indicator of economic health. The payrolls number is expected to improve, but a disappointment could spook the market.

The market is nervous ahead of the week’s remaining data, especially considering Wednesday’s disappointments

EURUSD flows light as the pair holds USD1.4560 area in current trade as earlier bounce off lows extended modestly to USD1.4570 before stalling. Earlier lows at USD1.4520 said to have seen some other ‘interesting’ names as euro buyers on the dip and other chatter adding some stops into the mix of order interest ahead of USD1.4500.

EURJPY stops triggered as the JPY130.60 support level gives way, with earlier noted bids in the JPY130.00 region next up. Additional stops reported below, ahead of the 200-day moving average at JPY129.63.

USDJPY ebbing to fresh lows for the day around JPY89.60 and on approach to earlier noted demand interest at JPY89.50/55. Move comes against backdrop of steady US stock futures and very slight dollar weakness elsewhere.

Movers & Shakers:

Important levels:

Source: Dukascopy