Forex US Review – Falling commodities lift Dollar and weigh down CAD

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The Euro rebounded against the Dollar was towards the end of the US session when news leaked out that Greece reached an agreement with EU-IMF on austerity measures. Prior to the news, the Euro was tumbling since demand for the Single Currency was limited as there was uncertainty on whether Greek Prime Minister George Papandreou will face difficulty in getting parliamentary approval next week for a package of budget cuts and asset sales.Meanwhile, the greenback was lifted after the Fed indicated yesterday that there will be no sequel to QE2 (quantitative easing). Without any further stimulus this could be negative for risky assets which means it could be positive for the Dollar. EURUSD reached a session low of 1.4126 from the open price of 1.4221 then rebounded to 1.4262.

 

Sterling extended losses into the US session, plunging against the Dollar to a new three-month low of 1.5937. The Pound has been suffering since Bank of England policy maker Paul Fisher made dovish comments basically indicating more quantitative easing and maintaining interest rates at record lows. This cemented the view that the outlook for the UK economy is gloomy. The Pound was further pummelled today after weak economic data, when the Confederation of British Industry’s retail gauge fell to its weakest level in a year. Before the end of the session Cable rebounded to 1.6010, following the Euro after news that Greece reached an agreement with EU-IMF on austerity measures.

 

The Swiss Franc gained against the Dollar in the US session after the U.S. released initial jobless claims data today which showed more Americans filed first-time claims for unemployment benefits last week, which is an indication companies are less confident about the US economic expansion than they were earlier this year. USDCHF dropped to 0.8363 from 0.8413.

 

The Canadian Dollar fell against the greenback, dragged down by tumbling oil prices. Canada is a major exporter of crude oil to the US. Crude oil fell to the lowest level in four months after the International Energy Agency announced that its members would release more barrels of crude oil from strategic reserves. The Canadian loonie is a commodity-linked currency and hence greatly affected by falling oil prices. USDCAD rose to 0.9802 from an open low of 0.9730.

 

Gold recorded its biggest fall in a day in over a month . The global economy is growing at a slower pace and is underperforming expectations, plus lower inflation rates makes investors move out of gold which is usually bought to hedge against inflation. Additionally there is an inverse relationship between gold and USD, so as the Dollar has been rising, this pushes down gold prices. Spot gold dropped to $1,512.38 from a US session open price of $1,538.18.

 

EURUSD USDJPY GBPUSD USDCHF USDCAD GOLD
OPEN

(12:00 GMT)

1.4221 80.59 1.5983 0.8413 0.9740 1538.18
DAY’S HIGH 1.4262 80.78 1.6010 0.8435 0.9802 1540.08
DAY’S LOW 1.4126 80.37 1.5937 0.8363 0.9730 1512.38
CLOSE

(21:00 GMT)

1.4258 80.56 1.6009 0.8387 0.9778 1522.28

Note: Daylight Savings Time in Effect for GMT