Previous session overview

The dollar and euro rose against the yen as Japanese importers bargain-hunted these units to settle accounts, while rises in Tokyo shares also boosted short-term hedge fund player demand for the currencies versus the safe-haven yen.

As of 0450 GMT, the dollar stood at JPY94.17 compared with its New York overnight level of JPY93.71. The European single unit changed hands at JPY126.05 from JPY125.63.

The ICE U.S. Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 81.451 from 81.330 in New York overnight.

The euro fell Tuesday as worries over how Greece would finance its sovereign debt once again sent investors fleeing the common currency.

But the Federal Reserve gave the euro a slight reprieve with the release of minutes from its rate-setting committee, which suggested no imminent change in the central bank's ultra-loose monetary policy stance.

Pound fell against the US dollar and the euro as mixed UK opinion polls took the fuel off its recent rally. Political uncertainty returned to the forefront, with Prime Minister Gordon Brown calling a national election on May 6. Fears the vote could leave no party in overall control, potentially making it difficult to tackle the UK's deficit, continue to weigh on sterling.

The Australian dollar touched an eleven and a half week high in Asia Wednesday as the commodity unit basked in the afterglow of Tuesday's interest rate hike.

Market expectation

Dealers said the greenback may rise further against the Japanese unit if U.S. government bond yields strengthen, making the securities more attractive for global investors. Currency market participants will therefore monitor how yields respond to upcoming U.S. auctions this week.

Dealers said the dollar may rise toward JPY95.00 if forthcoming U.S. Treasury auctions come in weak, buoying yields. In particular, market participants are focused on the USD21 billion 10-year bond auction later in the global day and USD13 billion 30-year tender on Thursday.

But the dollar's further gain could be capped in the near-term by Japanese exporters' sell-orders above JPY95, dealers said.

EURUSD currently trades around USD1.3366. A break of USD1.3350 exposes further demand seen at USD1.3345, with stops suggested on a break of USD1.3340. Below here and rate can ease on toward USD1.3325/20. Resistance remains at USD1.3390/00, more toward USD1.3410 with stops above. A break here to open a move toward USD1.3440, with offers noted from here and extending toward USD1.3460, with reports of stops mixed in on a break of USD1.3452.

EURJPY trading down as selling by Japan exporters prompt Asian speculators to follow suit, say traders. Exporters think JPY126.00 attractive level to sell EURJPY.

European stocks are set to open mixed Wednesday, as investors choose to pause and reflect on whether the recent gains mean that prices now adequately mirror the latest macroeconomic data, while the euro remains under pressure on lingering concerns about Greece.

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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