By Russell Glaser
In European trading today traders were moving into higher yielding assets such as equities and the euro while shunning the yen, the traditional safe-haven currency. ADP payrolls data will be released shortly and should dictate the trend for the remainder of the day.
The yen continues to weaken in trade versus the dollar and the euro as rate differentials are driving the yen lower. Rising European interest rates have been widely priced in and have fueled gains in the euro. But recent comments by Fed officials have opened the door for the possibility of a normalization of US monetary policy after more than two years of high liquidity. In response traders have been bidding the dollar higher this morning
Equities were stronger with the FTSE trading higher by 0.52% while the DAX was up over 1.60%.
At lunchtime during the European trading session the USD/JPY was up at 83.07 from 82.97. The EUR/JPY was at 117.11 from an opening day price of 116.92.
Morning data releases were positive as the KOF Economic Barometer showed positive sentiment in Switzerland which may be increasing expectations for a rate hike by the SNB Traders sent the Swiss franc higher versus the dollar as the USD/CHF traded lower at 0.9213.
British CBI Sales were significantly stronger than expected at 15 on forecasts of a decline of -1. This helped support the pound and the GBP/USD rose from a two month low to trade at 1.6025 from 1.5994.
Equities were stronger with the FTSE trading higher by 0.52% while the DAX was up over 1.60%.
ADP non-farm payrolls are expected at the opening of New York trading. A report that shows better than expected private payrolls may favor the short term trend of dollar strength and yen weakness. Resistance for the USD/JPY is found at 80.30 followed by 84.00 on an extension.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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