Previous session overview

The dollar strengthened slightly after better-than-expected U.S. weekly jobless claims were reported Thursday, solidifying the idea of a U.S. economic recovery gathering steam.

The dollar built on overnight gains after worse-than-expected euro-zone data and sagging global stock markets lent support to the greenback.

The better-than-expected weekly jobs figure could point toward an upside surprise in Friday's U.S. nonfarm payrolls numbers, further solidifying sentiment about a U.S. economic recovery and boosting the dollar.

The yen in early morning trading hit a four-month low against the dollar after overnight comments by Japan's new finance minister highlighted his reputation as a proponent of a weak yen, saying he wants the Japanese currency to weaken a bit more and that he would cooperate with the central bank to guide the yen exchange rate to "appropriate" levels.

Overnight, the euro had been undermined by data showing that euro-zone retail sales fell by a sharp 1.2% in November. This was not only the steepest monthly drop on record but was also much weaker than the consensus forecast for a 0.3% rise.

Meanwhile, in the U.K., news that two ex-cabinet ministers tried to organize a secret ballot on Gordon Brown's leadership sent the pound reeling as their tactics were seen undermining the prime minister ahead of a general election that is expected to be called in May.

The pound had already come under pressure earlier this week on fears that the country will face a downgrade after the election unless the next administration is able to come up with a credible plan to reduce the large budget deficit created by Brown's government.

Sterling was pushed down as far as USD1.5914 at one stage, its lowest point since the start of the year.

Market expectation

Euro remains above the earlier USD1.4299 low with residual demand expected in layers below USD1.4300 to USD1.4280 with stops below there. Next area of interest is the USD1.4255 of Monday lows which roughly coincides with the 200d ma at USD1.4248, expected to provide support though a break could see some nasty chop.

USDJPY ducking under JPY93.00 area now with some chatter suggesting hefty sales by a US investment name from the highs, perhaps as much as a yard of dollars by one estimate. Support expected JPY92.80/00. Dollar last at JPY93.04.

Pound recovery extends to begin challenge on reported resistance at USD1.5950. Area contained earlier recovery attempt with talk of semi official name providing supply in this area. A break and clear of USD1.5960 may open a move toward USD1.5980/85.

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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