Daily FX Market Outlook-12-10-2010 by AceTrader

Market Review – 11/10/2010 23:04 GMTThe dollar rebounds sharply from a fresh 15-year low against the yen on profit-taking
The greenback rebounded broadly on subdued trading with Japanese holiday. Although the dollar on Monday resumed recent downtrend and fell sharply to a fresh 15-year low of 81.37 once New Zealand market opened as weekend’s failure by IMF to defuse recent currency tensions prompted short-term speculators to sell the pair and this triggered stops below last Friday’s 81.72 low, the pair then rebounded strongly on short-covering due to wariness of another possible round of BOJ’s intervention despite Japan’s market holiday. The pair traded narrowly in European session but the buck later edged higher in thin NY session.   
Despite euro’s gap-up opening on Monday after IMF and the leaders failed to narrow currency disagreements at the meeting in the weekend, the single currency ratcheted lower in Asia from an intra-day high at 1.4012. Later in European morning, price weakened to 1.3916 after Reuters reported that Chinese central bank has raised reserve requirement for the 6 large commercial banks by half a point. The single currency dropped further to an intra-day low of 1.3866 in NY mid-day on dollar’s broad-based rebound before stabilising.   
The British pound rose marginally higher to 1.5975 initially but the pair retreated from there and traded narrowly in Asian and European sessions before falling to an intra-day low of 1.5869 in NY mid-day in tandem with euro. Markets were wary ahead of a slew of data due on Tuesday and CPI is expected to show UK inflation staying high. In addition, concerns about the prospect of more monetary easing in the U.K encouraged profit-taking after sterling’s recent strong rise.  
Data to be released on Tuesday includes:  
Australia NAB business confidence, Japan Consumer confidence, Germany CPI final, HICP final, WPI, U.K. RICS house prices, BRC retail sales, CPI, CPI core, RPI, RPI – X, Trade balance (gbp), U.S. Minutes from Sept. 21 FOMC Meeting.