Afternoon Forex Overview

The USD has a quiet overnight session and as could be expected volumes were exceptionally light. The markets are closed in the US today for the independence holiday and the only FX market active is the European market which will be closing shortly ending the week.

The U.S. Labor Department on Thursday said nonfarm payrolls fell by 467,000 in June, more than the 325,000 forecast by economists. The U.S. unemployment rate rose to 9.5%, less than the anticipated rise to 9.6%.

The dollar and Japanese yen have tended to trade in an inverse relationship to levels of risk appetite. The currencies have tended to fall as equities rise and investors show more tolerance for risk. They have tended to rise when investors leave riskier assets in the face of economic uncertainty or financial turmoil.

EURO dropped through weekly support early between the close of New York and the open in Asia yesterday; low prints at USD1.3928 found rumored stops under the USD1.3980 and USD1.3950 areas. High prints at USD1.4029 were offered again as the rate can't hold USD1.4000 handle.

GBP traded down to support at a low print at USD1.6301 holding off the area of reported stops rumored around the USD1.6280 area.

USDJPY fell to a low print at JPY95.69 where buyers lifted the rate back to the 96.00 handle; high prints at JPY96.14 in two-way action.

Market expectation

Market conditions remained thin and potentially volatile with U.S. markets shuttered for the Independence Day holiday, analysts said.

USDJPY remaining contained around the JPY96.00 area, where traders note expiry interest for the 1400GMT cut. Additional expiries seen placed at JPY96.50 and JPY97.00. Near-term offers are at JPY96.10/15, with bids into JPY95.70 and stops below.

EURUSD continues to hold tight around USD1.4000, the level reportedly holds the strike of an expiring option for the 1400GMT, and said to be for decent size (US investment bank reportedly holds it). Offers remain in place from around earlier highs of USD1.4027, strengthening into USD1.4030/35 with stops above. Bids USD1.3980 ahead of USD1.3965, with bid interest dotted from this level and extending to USD1.3950.

Pound recovery extended to USD1.6353 (76.4% USD1.6370/1.6300) before upside momentum faltered, with rate currently trading around USD1.6345. A move above USD1.6353 may allow for a push back toward that earlier recovery high. Bids remain in place to USD1.6300, with further demand noted at USD1.6285/80.

Traders will likely come back on Monday with a slightly different point of view looking for a further upside correction in the USD and more two-way action to get there. Look for a solid start to the week next week to include a firm tone.

Dukascopy Swiss FX Group

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