Previous session overview

The U.S. dollar gained versus the euro amid worries about Greece's fiscal situation and refuted rumors that German Chancellor Angela Merkel was preparing to resign.

The U.S. currency held onto those gains and others against major currencies as reports showed inflation was tame and an index on regional manufacturing improved.

The dollar index (DXY), which gauges the performance of the greenback against a trade-weighted basket of six major currencies, rose to 77.221, up from 76.762 in North American trading late Thursday.

The euro slipped to USD1.4377 from USD1.4498 late Thursday. The European single currency fell 0.8% against the Japanese unit to change hands at JPY130.93 and declined 0.7% against the British pound to buy 88.17 pence.

The British pound fell 0.2% against the U.S. dollar to USD1.6305.

The dollar slipped marginally against its Japanese counterpart, buying JPY91.12, down from JPY91.20 Thursday.

The U.S. government's consumer-price index rose 0.1% in December a slower pace than analysts expected. The report also showed prices rose 2.7% in 2009, while core prices, excluding food and energy, rose 1.8%.

Manufacturing activity in New York State strengthened in early January, the New York Federal Reserve said. The Empire State Index rose to 15.9 in January from an upwardly revised 4.5 in December. Readings above zero indicate more firms were growing than contracting.

Market expectation

The euro is coming under pressure as investors grapple with the possible ramifications of crippled public finances in Greece and whether this may spread to other countries. As a result, that's keeping the euro/U.S. dollar cross largely in balance, analysts said. The euro could slip toward USD1.4280, but it's difficult to see a breakout either way in the near term

Pound traders report that a few option expires placed around USD1.6300 are currently keeping the rate attracted to this area as we approach to 1500GMT cut. Rate trades around USD1.6298.

USDJPY regains some poise with prints back over JPY91.00 area, gains stretching to JPY91.15 as the pair adds on a half yen from earlier lows at JPY90.60 area. Offers around JPY91.10 absorbed on the lift but traders still suggesting sell rallies remains the mode in this pair for now as risk trades are cut back. Further offers eyed at JPY91.50/70.

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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