Morning Forex Overview

Previous session overview

The yen fell against the dollar and euro in Asia Friday as Japanese Prime Minister Yukio Hatoyama's comments favoring a weaker yen prompted non-Japanese players to sell the currency.

Growing expectations for further monetary easing by the Bank of Japan also weighed on the Japanese currency, dealers said.

While many market players didn't interpret his remarks as a signal of imminent dollar-buying intervention, the comment sparked yen-selling by non-Japanese players, helping push the dollar up versus by a tenth of a yen, dealers said.

The US dollar also gained support from speculation in financial markets that Japanese central bank may take further easing steps by ratcheting up money provision measures at its two-day policy meeting that ends next Wednesday.

Such a view eventually prevailed in the market and the dollar later shed some of its gains against the yen. As of 0450 GMT, the dollar stood at JPY90.62, up from JPY90.56 in New York late Thursday. The euro changed hands at JPY124.05 from JPY123.86.

Yesterday the Euro dipped to USD1.3621 in European morning on that news but renewed buying interest emerged there and contained its intra-day weakness. In NY morning, it rose briefly above Wednesday' high of USD1.3680 to USD1.3688 after the release of U.S. jobless claims which was only slightly less than expected. U.S. jobless claims came in at 432,000 versus the expectation of 460,000.

The British pound rose after inflation data came in slightly higher than expected, though the gains were minimal ahead of the economic and political concerns of the upcoming general election. A quarterly survey from the Bank of England showed Britain's expectations for inflation over the next 12 months rose to 2.5% in February.

The Australian dollar inched higher in Asia trade Friday, ending a strong week for the currency that was helped by underlying strength in the February jobs report and gains in metals prices

Market expectation

The euro is edging higher against major rivals on Friday. But with concerns over sovereign debt lingering in the background, the euro is likely to enjoy only a brief reprieve. Investors were hesitant to take big positions ahead of Friday's U.S. retail sales data. Retail figures are seen as a key indicator of the pace of the global recovery, said analysts.

Pound picks up a bid tone, tracks euro-dollar's rally extension above USD1.3700. Rate moves through the overnight high at USD1.5089 to extend recovery to USD1.5105 at writing. Offers seen placed between USD1.5110/15, a break of USD1.5120 to expose stops, which if triggered to open a move toward USD1.5150. Rate currently trades around USD1.5095.

EURUSD firm tone persists though rate seems to be meeting a decent hurdle from the offers placed from USD1.3705 through to USD1.3715. Picking up talk of small stops through USD1.3710 mixed in, with larger stop interest seen on a break of USD1.3715. If rate can clear this area expected expose to USD1.3735/40. Rate currently trades around USD1.3702. Support remains at USD1.3670.

European stocks are expected to open firmer Friday, following Thursday's rise in U.S. stocks that took the S&P 500 index to a 17-month high.

Dukascopy Swiss FX Group

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