Afternoon Forex Overview
February 9, 2010 - 12:09 pm by Dukascopy · Leave a Comment
Previous session overview
The dollar declined versus the euro on Tuesday as speculation mounted over a possible Brussels-led rescue of Greece and other heavily-indebted southern European countries.
The dollar gained versus the Japanese yen, however. The pair tends to remain closely tied to investors’ appetite for risk assets and swings in equity markets, with the yen tending to lose more often when investors snap up stocks, commodities and other assets perceived as risky.
The dollar bought JPY89.45, compared to JPY89.39 late Monday. Japan’s interest rates are among the lowest of major countries, and expected to remain low for some time, making the yen an attractive currency to borrow in. Traders borrow cheaply in yen to invest in higher-yielding assets, making money on the difference in so-called carry trades.
The euro rose to USD1.3742, up from USD1.3674 North American trade late Monday. The euro slumped to an eight-month low versus the dollar last week as worries rose about the potential for default by Greece, Portugal, Spain and other countries on the periphery of the euro.
The U.K. pound was at USD1.5636 from USD1.5598.
The dollar index (DXY), which tracks the greenback against a trade-weighted basket of six major currencies, fell by the most since November, to 79.981 from 80.309 in late North American trading on Monday.
Market expectation
US dollar slips modestly in currency markets as stocks, oil and commodities all push higher in the wake of remarks that suggest some kind of Greek rescue package may be in the works, this despite the lack of specific details thus far.
Pound slips back under USD1.5600 area for trade to USD1.5590 as traders note the negative remarks on UK outlook from a ratings agency, the pair also likely seeing pressure from dollar demand at the London fixing event. Cable bids seen placed at USD1.5560 area of overnight lows.
EURJPY eases to JPY122.70 area around the London fixing event, the pair trading lower as US stocks gives up some of their earlier gains. Bids eyed to JPY122.60 in modest size.
No major U.S. economic data is scheduled for release Tuesday, which will help keep the concerns about sovereign debt problems as the overriding factor in the market.
The rebound in the euro may prove to be short-lived, traders said.
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