Previous session overview

The euro fell to a five-month low versus the U.S. dollar Wednesday as fears that Chinese efforts to rein in lending led investors to shun risky assets and worries about Greece's budget problems sent kept pressure on the euro.

The U.S. currency extended gains after data showing benign inflation and a rise in housing permits, and U.S. equities opened lower.

The dollar index (DXY) jumped almost 1% to 78.269, up from 77.451 in late North American trading Tuesday. The index tracks the dollar against a trade-weighted basket of six major rivals.

The euro fell to USD1.4130, down from USD1.4301 late Tuesday, hitting its lowest level since mid-August.

The dollar traded at JPY91.29, reversing an earlier loss to gain 0.1% versus the Japanese currency.

The dollar held onto strong gains versus the euro and other major currencies after a pair of U.S. reports showed housing starts improved and core wholesale prices remained benign last month.

Market expectation

EURUSD ebbing to fresh lows for the day around USD1.4110 now ahead of the London fixing but flows not said to be especially heavy as risk-reduction and broad dollar demand continue to drive trade. Bids still eyed to USD1.4100, interest turns mixed below as bids are added to the earlier reported stop zone below the figure.

The Pound is back above USD1.6300, but seen faltering ahead of USD1.6310. Resistance earlier noted between USD1.6315/25, a break to open a move toward USD1.6340/50, traders says.

EURGBP begins to pressure reported support/target area between stg0.8660/50, touching a low so far of stg0.8659 (Aug 24 low). Below this area and rate can ease on toward stg0.8635/30, traders have suggested.

USDJPY high print was JPY91.46 on the push higher, with strong buying seen from below JPY91.00 on up to the highs as a battery of good names took it in turns to scoop up dollars in good size, traders says. Scale of the buying suggests perhaps one large account could have been behind the demand, trader speculates that a yard of dollars could have been taken out of the market. Buying is done through UK and US banks. Dollar backtracks to JPY91.30 now that the demand is satisfied.

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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