Daily Market Review – US Session – EUR was hit by the German votes but received support from the ECB – CHF well of record highs

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EUR was down 0.3% against the USD during the beginning of the session at around 1.4037, and was hovering near a previous session low of 1.4020 as the single currency came under selling pressure following a regional election loss by German President Angela Merkel’s party. Further losses limited due to bids from Asian Banks seen down to 1.4010. Later on the day the single currency outperformed most major currencies with more gains likely over the near term, given that investors believe that tighter monetary policy by the European Central Bank is around the corner. EUR/USD moved as high as 1.4114 and against the JPY in gained 0.5% to 115.14. Near-term euro suppοrt lies at the 20-day moving average near 1.40, and trend line support around 1.3974, which is drawn through the euro’s January 10 low of 1.2872 and its March 11 low of 1.3751.

 

GBP fell today, hitting a 5-month low against the EUR and a 2-month low versus the USD due to a pullback in expectations on how soon interest rates may rise given a still fragile economy. Sterling fell as low as 1.5935 during the previous session, its weakest since early February. This session, GBP/USD was trading at 1.5975 and moved upwards hitting 1.6036. GBP was stung by weak retail sales data last week, while data showing a slide in UK house prices gave further evidence of a shaking economy.

 

CHF slipped against the USD and the EUR today despite ongoing turmoil in the Middle East and Japan’s nuclear crisis on prospects for tighter policy in the eurozone and US. CHF was down 0.3% against the USD opening the session at 0.9182 and hitting a low of 0.9151. USD was also helped by Friday’s comments from a US central bank official who said the Federal Reserve is poised in the “nοt tοo distant future” to begin rolling back its super loose monetary policy to avert inflation. The SNB (Swiss National Bank) has its target for the 3-month Swiss franc LIBOR ultra low, and many economists expect the SNB to wait to hike until after the ECB.

 

Gold prices jumped today as the USD erased gains on the EUR, once the ECB seemed likely to tighten monetary policy as early as next month. The precious metal opened the session trading at 1415.5 and moved as high as 1423.0. The precious metal rallied to a record 1447.50 an ounce last week as violence in the Middle East and North Africa and reemerging sovereign debt concerns in the euro zone prompted risk-averse buying of gold.

 

EURUSD USDJPY GBPUSD USDCHF USDCAD GOLD
OPEN

(12:00 GMT)

1.4054 81.68 1.5975 0.9182 0.9784 1415.5
DAY’S HIGH 1.4114 81.79 1.6036 0.9205 0.9789 1423.0
DAY’S LOW 1.4025 81.59 1.5971 0.9151 0.9740 1410.1
CLOSE

(21:00 GMT)

1.4091 81.71 1.5991 0.9171 0.9764 1420.1