Friday, August 12, 2011

Market Morning Overview - August 12, 2011

Previous session overview

The dollar maintained a generally firm tone in Asian trading while the euro trended lower Friday, with Japan's summer holiday period cutting into volume. 

The dollar held onto gains overnight in New York, treading water around JPY76.85 in what would appear to be at least temporarily out of intervention range for Japan's Ministry of Finance. The dollar slid Thursday to JPY76.30, provoking a rate check by the Bank of Japan that pushed the currency back up. 

The dollar was at JPY76.80 as of 0450 GMT, from JPY76.83 late in New York trade Thursday. 

The euro trended lower after, meanwhile, Asian stock markets failed to get swept up by Wall Street's strong gains overnight, with the Dow Jones industrial average up 3.95%. As of 0500 GMT, the Nikkei Stock Average was down 0.6% at 8931.24. 

The euro was at USD1.4183, from USD1.4241 late Thursday in New York, and at JPY108.87 from JPY109.29. 

The market was subdued with smaller-than-normal trading volumes, especially in Tokyo where the annual late-summer holiday had begun. 

Among other currencies, the U.K. pound was at USD1.6198 from USD1.6230. The dollar was at CHF0.7600 from CHF0.7620. The ICE Dollar Index was at 74.779 from 74.636. 

The Australian dollar was slightly higher late Friday as investors nervously awaited the start of European trading amid fears of more bad news from the region's banks and the sovereign debt crisis crippling many of its member countries. At 0640 GMT, the Australian dollar was at USD1.0285, up from USD1.0258 late Thursday but down from an intraday high of USD1.0349. Against the Japanese yen, the Australian dollar was at JPY78.93, up from JPY78.665.

Market expectation

Some traders said moves by European regulators to ban short-selling of financial stocks had created fresh concerns about the underlying situation.

Investors are keeping an eye on the Swiss franc amid speculation that the Swiss National Bank could resort to dramatic measures to weaken its currency, which has shown persistent strength against the euro and the U.S. dollar recently amid strong safe-haven demand.

European stocks are expected to open higher Friday, as market sentiment improves following Thursday's announcement of short-selling restrictions in parts of Europe and the release of lower-than-expected jobless claims data from the U.S.

Looking ahead, second-quarter GDP figures for France and European Union industrial production figures for June are due to be released. 

Among U.S. data to watch are retail sales figures for July and the University of Michigan consumer sentiment index for August.