Previous session overview

The dollar rose versus the Japanese yen and British pound on Wednesday, but the euro managed to erase an earlier loss versus the greenback after stronger-than-expected manufacturing data from France and Italy.

The euro traded at USD1.3620, up from USD1.3598 in late North American trading Tuesday. The single currency had been under pressure in early activity, knocked down in part by weaker-than-expected German trade data.

The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 80.661 from 80.580.

The greenback rose to buy JPY90.75, up from JPY89.98 late Tuesday. Throughout the credit crisis and recession, the Japanese currency was one of the biggest beneficiaries of investor demand for a relatively safe haven from the storms in other markets. As the crisis abated and signs of economic recovery grew, the yen has fallen.

Data from Italy and France showed stronger-than-expected jumps in manufacturing output in January, which analysts said should bode well for euro-zone output figures due for release on Friday.

Separately, Germany's exports unexpectedly fell in January, according to government data.

Analysts also paid close attention to data showing China's trade surplus narrowed last month.

The beleaguered U.K. pound slumped Wednesday after weak economic data again brought into focus the tentative nature of the U.K.'s emergence from recession.

U.K. manufacturing output fell sharply in January, while industrial production unexpectedly slipped after economists had expected a slight gain. The pound dropped to its lowest level in a week, shedding nearly 0.5% against the dollar by morning New York trading.

Market expectation

EURUSD Fresh high for the day now near USD1.3630 where offers are reported, but volumes very, very muted, a couple of traders complain.

USDJPY traders report some decent sales in the USDJPY around the JPY90.70 area, the market moves slightly lower to JPY90.67 but holds.

Pound stops triggered on the break above USD1.4960, with rate extend recovery to USD1.4968. US investment house earlier and now a technical analysts have put out cable buy recommendations, the latter establishing a long position, with stop at USD1.4775 and target at USD1.5700.

EURGBP - UK clearer and a European name cited with providing the downside pressure as rate eases back below stg0.9100. Support now seen placed at stg0.9090/85 ahead of stg0.9065/60.

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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