Major

The GBP remained in focus following a sharp drop against the U.S. dollar yesterday on concerns about the country's weak fiscal position and uncertainty over a looming election. Expectations that a large amount of sterling may be sold to fund the US$35.5 billion purchase of an America's big insurance company's Asian life-insurance business by a U.K. insurer big name also weighed on the pound. The pound was recently trading at $1.4870, down from $1.4993 in New York late yesterday. However, it held above Monday's low of $1.4785—the currency's weakest level since May 1, 2009. The Australian dollar got an early lift against its U.S. counterpart in Asian trading Tuesday after the Australian central bank raised interest rates as expected by a quarter point to 4.0%, but the move only briefly stalled the greenback's overall rise. The dollar index (.DXY), which measures the greenback against a trade-weighted basket of six major currencies, rose to 81.011, from 80.753 in late North American trading yesterday. The dollar edged up to 89.23 yen, from 89.06 yen late last night.

Forecast:

Market has their eyes still on fiscal deficit issues that overwhelm the European countries, including the U.K.; pessimistic sentiment towards the current and outlook of global economy drives up risk aversion and push JPY higher as safe haven.

Forecast USD/JPY range: 88.50 – 89.50

USD/IDR

The Indonesian rupiah traded near the strongest level in more than five weeks on optimism an export recovery is gathering pace. Foreign investors bought $20 million more local shares than they sold yesterday, helping lift the Jakarta Composite Index higher for a second day. Exports, which account for about 29% of Indonesia's GDP, rose in January by the most since at least December 1995. Policy makers will likely keep the benchmark interest rate at 6.5% on March 4. The rupiah strengthened to 9270 even in the midst of the plenary session of voting for Century Bank's bail-out decision. The pair eventually closed at 9305.