Dukascopy analytic desk report (English only)
Published: 21 December 2009 at 08.01 GMT

Previous session overview

The dollar fell slightly against the yen and euro in Asia Monday as institutional players and speculators in the region locked in profits after the U.S. unit's rise to a more-than-one month high Friday.

Yields on 10-year notes ended Friday at 3.53%; 10-year notes usually move inversely to their yields.

Japanese exporters' selling for regular account settlements also weighed on the dollar, traders said. The U.S. unit stood at JPY90.30 compared to JPY90.37 late Friday in New York. The euro edged higher to USD1.4352 compared to USD1.4335.

The Dollar Index, which tracks the U.S. unit against a trade-weighted basket of six currencies, was at 77.694, down from 77.758 Friday.

The euro was almost unchanged against the yen, exchanging hands at JPY129.58 as of 0450 GMT compared to its New York level of JPY129.57 Friday.

The Pound fell against the dollar but was stronger against the euro as the Bank of England mortgage approvals climbed to its highest in a year in November. Mortgage approvals by the 6 biggest banks in the UK rose to 63,000 from 60,000. The British government had a GBP 20.3 billion budget deficit in November, better than forecast 23.0 billion deficit.

The Australian dollar ended Monday little changed from its closing levels on Friday as the focus switched to upcoming Christmas holidays. Yet traders said the unit was oversold and that they expected it to bounce in the New Year.

Market expectation

Traders said the value of the dollar looks to be on the rise this week if upcoming U.S. data such as existing home sales show improvement, raising expectations of an end to ultra-low interest rates sooner than previously expected.

For EURUSD technical traders are highlighting Friday's close came around earlier opening Asian levels, forming a doji candle on the charts which suggests near-term indecision ahead. Some demand to pick up euros noted into the USD1.4250 area, while techs are seeing little in the way of near-term support ahead of the 200-day moving average at USD1.4187, euro-dollar having traded above since early May of this year.

Euro-sterling sees continuing weak daily studies as the decline stall around the 200-DMA at stg0.8870. The move is now also running into the base of the Bollinger band at stg0.8855. Bears also face former congestion area at stg0.8833/38 as well as Fibonacci support at stg0.8822. Initial resistance is the 5-DMA at stg0.8900.

Players are now focused on Tuesday's U.S. existing home sales and Thursday's durable goods order, both for November, to gauge whether the U.S. economy is on track for recovery.

The U.S. unit may rise to JPY92.00 this week, while the euro may decline to USD1.4250, dealers said, if the forthcoming data come in stronger than expected.

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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