Previous session overview

The euro headed towards its strongest weekly advance against the dollar since September, basking in the after-glow of a move to stress-test European bank balance sheets.

The euro traded at USD1.2371, from USD1.2383 in late New York trading on Thursday.

It's up from USD1.209 last Friday, putting the single currency on pace for the best week in nine months. It touched a four-year low earlier this month.

The U.S. dollar index (DXY), a measure of the greenback's strength against a basket of currencies, inched up to 85.696 from about 85.61 Thursday.

For the week, it's fallen from 87.507, for the biggest drop since May 2009.

Against the Japanese yen, the dollar fell to JPY90.66, from JPY90.98 Thursday. A week ago, the U.S. currency bought JPY91.67.

On Thursday, European Union leaders meeting in Brussels announced a plan to publish stress tests of their lenders, a reversal of policy after previously rejecting calls from the U.S. to do so.

Elsewhere, sterling gained to a one-month high, brushing up against USD1.49, partly on generally robust investor confidence, and partly after net borrowing was shown to be lower than expected in May; by New York trading, the pound had given back its gains to trade slightly lower on the day.

The Office for National Statistics said Friday that the public sector borrowed a net GBP16.0 billion in May, down from GBP17.4 billion in May 2009. Economists had expected to see net borrowing of GBP19.5 billion.

Market expectation

USDCAD has slipped towards the lower end of its daily range and is currently at 1.0263. Analysts say the pair remains in consolidation mode after support at 1.0225 held Thu. Resistance between 1.0335 and 1.0387 is expected to attract short-term selling interest in USDCAD with key support at 1.0225 in focus on the downside.

There are no major economic releases due for the U.S. session. Spanish Prime Minister Jose Luis Rodriguez Zapatero meets with International Monetary Fund Managing Director Dominique Strauss-Kahn in Madrid on Friday both sides for days have denied reports that Spain would be tapping emergency aid from the EU and the IMF.

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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