Daily FX Market Outlook-2-11-2010 by AceTrader

Market Review – 01/11/2010 23:00 GMTEuro falls against dollar on upbeat US manufacturing data
The single currency tanked against dollar on Monday as upbeat U.S. manufacturing data prompted investors to reduce their short positions on dollar ahead of Fed meeting.    
Euro dropped briefly but sharply to 1.3894 in Asian morning on dollar’s rebound especially versus the Japanese yen on talk of possible intervention by BOJ. Although the single currency rebounded strongly to 1.4012 before European opening on renewed risk appetite due partly to the release of stronger-than-expected official Chinese PMI data (which came in at 54.7 in October, versus the forecast of 52.9 and 53.8 in September), the pair dropped from there on long liquidation. Euro extended its weakness after the release of stronger-than-expected U.S. ISM manufacturing PMI data for October (which came in at 56.9 versus the expectations of 54.0) and fell sharply to 1.3864 in NY morning before trading sideways.  
Although the greenback jumped from a fresh 15-year low of 80.21 to 81.60 against the Japanese yen in Asian morning on talks of possible BOJ’s intervention, dollar pared its gain and weakened to 80.32 before staging a recovery in NY session due to the release of strong U.S. ISM manufacturing data.  
Despite cable’s brief drop to 1.5995 in Asian morning on dollar’s strength, the British pound rebounded on risk appetite. Sterling climbed to an intra-day high of 1.6090 in European morning after the release of U.K. PMI for the manufacturing sector (which came in at 54.9 for October, versus the forecast of 53.0) and then traded narrowly in NY session. Cable was also supported by cross buying in sterling versus euro as eur/gbp tumbled from 0.8722 to 0.8652.  
Economic data to be released on Tuesday include:  
Australia RBA rate decision, Swiss Retail sales, Germany Manufacturing PMI, EU Manufacturing PMI , U.K. Halifax hse prices, PMI construction.