Previous session overview

The euro climbed to session highs against the dollar and the yen in mid-morning trading Wednesday after reasonably robust U.S. service sector data helped revive demand for risk.

Europe's common currency reversed its earlier losses and scrambled to a session high at USD1.4393, after the Institute for Supply Management's non-manufacturing purchasing managers' index rose to 50.1 last month from 48.7 in November.

The December index was slightly below the 50.5 expected.

The euro gained significantly against the yen after the data, and that move fed through into the euro versus the dollar.

The dollar also advanced against the yen, building on earlier gains after Japanese Prime Minister Yukio accepted the resignation of Finance Minister and appointed Deputy Premier Naoto Kan to replace him. Some analysts believe Kan would favor more active steps to weaken the yen.

Some of the dollar's gains against the yen were trimmed after the ADP private sector jobs report for December showed a loss of 84,000 jobs, not far from the expected decline of 90,000.

Market expectation

Traders surmising that market will start to build "whisper" expectations for the NFP outcome and those numbers are likely to be north of flat, they say, possibly rising as the Friday release approaches. As they expectations for that outcome rise, euro may lift a bit, providing possible selling opportunities as some decide to fade the move. Risk is that market gets itself short of euros ahead of the release, leading to a squeeze higher regardless of the actual payrolls outcome. Euro last at USD1.4375.

USDJPY gains extend to JPY92.65 area now as the pair pushes above the overnight high area at JPY92.50 that had held good supply, the dollar able to flush know stops above JPY92.60 on the move though evidently not gaining much more traction from that interest at this point. Further offers seen placed at JPY92.70/80 area to provide further resistance.

Pound recovery off recently posted lows at USD1.5938 extend to USD1.5985 and seen meeting offers placed between USD1.5985/90 (USD1.5987 38.2% USD1.6065/1.5938). Move seen as dollar comes under pressure with cable dragged higher by the stronger rally in euro-dollar. Further resistance noted between USD1.6000/10.

Disclaimer: the data made available by Dukascopy (Suisse) SAis for informational purposes only. Publication of this data by Dukascopy (Suisse) SA does not constitute provision of investment advice and Dukascopy (Suisse) SA assumes no responsibility with regard toany information, forecast or recommendation herein contained and assumes no responsibility with regard toany losses resulting from any activities conducted the basis of this data, including any investment decisions.

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