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Dukascopy Market Review, European Session, 30th October

Previous session overview
The euro gained further against the dollar in Asia Friday as rising regional stock markets and signs of U.S. economic improvement encouraged investors to take risks by loading up on higher-yielding currencies.

The release of strong Japanese jobs data in the day, coupled with the decision by the Bank of Japan to unwind some of its stimulus steps, offered the latest indication of global economic revival. But they had little impact as investors were focused more on coming U.S. and European economic data, which could give the euro a boost if they beat expectations, dealers said.

Demand for the euro and other higher-yielding currencies rose as optimism over the global economy--fed by better-than-expected third-quarter U.S. gross domestic product data issued overnight-pushed up Tokyo shares, which in turn lifted investor risk appetite, dealers said.

The U.S. currency fell more than a third of a yen to an intraday low of JPY91.09 on selling by Japanese exporters, traders said. But dealers seemed to be divided over the yen's outlook.

The Euro stabilized in Asia on solid Central Bank support before gaining with the US data back above USD1.4800. Helping sentiment towards the single currency was the better than expected German unemployment change of -15k vs. +15k forecast in October. EURUSD traded with a low of USD1.4684 and a high of USD1.4859 before closing at USD1.4840.

The Sterling rose against the dollar after reports that showed mortgage approvals increased. Lenders granted 56,215 home loans, an 18-month higher in September, which beat forecasts of 53,600 loans.

The Australian dollar rebounded sharply in Asia on Friday after data showed the U.S. economy grew in the third quarter but trading remains nervous ahead of a slew of domestic risk events next week.

Market expectation
The euro is nudging higher against the U.S. dollar, helped by the stock market gains.

For EURUSD support remains at USD1.4825/15, with stops placed on a break of USD1.4815/10. Through here and rate expected to meet further support between USD1.4800/1.4780.

Pound recovers off early morning lows at USD1.6524, the move down ahead of the Nationwide release breaking the Asian base at USD1.6536, with rate snapping back to USD1.6558 (61.8% USD1.6580/1.6524).

Offers now seen to USD1.6560, a break to open a move toward Asian high at USD1,6580 ahead of stronger interest between USD1.6600/10 (NY high USD1.6605). Support remains at USD1.6525/20.

European stocks are expected to open higher Friday, benefiting from stellar performances on Wall Street and Asian share markets overnight, after U.S. gross domestic product data surprised to the upside and showed that the world's largest economy returned to growth in the third quarter, recording an annualized growth rate of 3.5%.

Data due later in the global day include U.S. consumer spending for September, U.S. consumer confidence for October, and German retail sales for September.

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