Daily Forex Overview
Thu, Feb 7 2008, 08:59 GMT
by Raivis Zile
Previous session overview
On Wednesday, the dollar jumped within a narrow range from losses to gains against the euro as equities fluctuated with risk appetite.
Markets expect the ECB to keep rates steady at 4.0%, with Trichet acknowledging some downside risk but still focused on the bank's single mandate to control prices and the pressure it faces from high inflation.
Yesterday's US ISM non-manufacturing report was a shocker, collapsing from 53.2 to 44.6 in January.
The Euro weakened against the dollar today as a stronger than expected productivity report was released. There are signs of an economic slowdown, after yesterday's euro zone retail report showed a -0.1 decline despite Christmas spending.
The Japanese yen strengthened against the dollar. Asian stocks posted their biggest loss in two weeks, with worries about the health of the global economy.
The British pound fell briefly to 1.9554 in European morning and later briefly bounced to 1.9636 ahead of the interest rate decision from the Bank of England, which is widely expected to cut rates by 25 basis points to 5.25% from 5.50%.
The Australian dollar continued to weaken Thursday, as yet more negative credit headlines on Wall Street spooked investors, sending higher yielding currencies lower. The Australian and New Zealand dollar weakened against the dollar as investors unwound their carry trades after the MSCI Asia Pacific Index of regional shares fell.
Market expectation
Today EUR ECB President Trichet Speaks: as usual, the main event of the day; we have to pay attention to comments regarding inflation and growth: If Trichet implies that (the ECB) may change its hawkish stance, investors will likely sell the euro.
EUR/USD is right now at 1.4610 bearish in daily and 4 hours charts, yet the pair will have to break the key Fibonacci level mentioned yesterday, 1.4589, 61.8% of the 1.4365/1.4950 rally, to continue in that direction.
GBP/USD is quoting at 1.9603, tending bearish despite also rebounding around the Fibonacci level mentioned yesterday, 1.9575 61.8% Fibonacci rally 1.9337/1.9957, as the pair was unable to confirm under that point.
USD/JPY is quoting at 106.33 and despite the range the pair is into, bigger charts are tending lower.
This Saturday, the Group of Seven (G7) will meet in Tokyo to discuss high oil prices, the economic outlook.
With dollar appreciating on risk aversion (American stocks continue going down while gold return to the 900 level) and US data continues weak, today could be a definition day for the American currency.
Today we will see the release of Japan's machine tools, U.K. industrial and manufacturing production, German factory orders and U.S. pending home sales.
Source: http://www.fxstreet.com/fundamental/market-view/daily-forex-overview/2008-02-07.html
