The Japanese yen and US dollar fell against majors as the upbeat manufacturing report from China and second quarter growth data in Australia gave stocks a boost and damped demand on refuges ahead of the release of US ADP employment change and ISM manufacturing.
Later in the day, ISM manufacturing for August is expected to show decline 52.8 from 55.5 while ADP employment change will reach 15 thousands in August from 42 thousands in July, yet the main highlight of the week will be Friday's non-farm payrolls.
Despite the rise in high-yielding currencies today, still there are fears with regard global recovery after the series of dismal reports released recently from the United States and lowered growth forecasts by major central banks.
The dollar index, which tracks the dollar movements against six major currencies, retreated to 82.50 compared with the day's opening at 83.11 after hitting resistance at 83.15 levels.
Concerning the euro-dollar pair, it rose today after getting support at 1.2675 which lifted the pair up to 1.2792 causing it to breach resistance at 1.2780. Today, PMI manufacturing' expansion witnessed a lowdown as it grew to 55.1 in August compared with 55.0 in July, yet the main focus will be on the September's rate decision tomorrow which will be followed by latest growth and inflation projections announced by Trichet.
The euro-dollar pair so far has touched a high of 1.2817 and a low of 1.2661, while for the rest of the day the pair is expected to move between support and resistance at 1.2730 and 1.2840 respectively.
Turning to the sterling-dollar pair, it is showing incline on the daily charts after falling to a low of 1.5334 as the decline in PMI manufacturing to 54.3 in August, lower than estimates of 57.0, pushed the pair to the downside. The pair gained support at 1.5322 which represents 38.2% Fibonacci level to the upside trend that started since the end of May.
The royal pair is currently trading at 1.5409 after touching a high of 1.5417, whereas it is expected to move between support at 1.5360 and resistance at 1.5485 for the rest of the day.
With regard to the dollar-yen pair, it is continuing its downside trend on the daily charts ahead of the release of US that may reflect weakness in the US economy and in the absence of intervention from the BoJ to weaken the currency that is currently hovering above 15-year high against the dollar.
So far, the pair is trading at 83.93 after recording a high of 84.57 and a low of 83.66, while support is seen at 83.05 while resistance is at 84.85.