Daily Market Review – US Session-Trichet’s speech makes Euro slip and Gold rise further despite the ECB interest rate hike

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The single currency during the US Session recovered some of the losses occurring from the EU Session. Hours before the long awaited ECB interest rates meeting a lot of long EURUSD holders closed their positions with the currency dropping from the 14 month high. The single currency jumped to a session high of 1.4325 when it was confirmed that the interest rates were going to be increased by 0.25% by ECB. However a speech by the ECB president Jean-Claude Trichet, shortly after the rates hike, stating that it cannot be confirmed if this hike is a one of many or if it’s just a one of occasion sunk the hopes of Euro investors expecting more hikes and a better Euro economy. As a result the Euro dropped in value and the interest rate hike effect on the Euro dropped in sentimental value.

The Sterling against the US Dollar was generally traded in a range with quite high volatility levels. Earlier in the day the announcement by the Bank of England that the UK interest rates will remain steady at 0.5% sunk the Sterling but the losses were later recovered. Important production price index figures are to be announced tomorrow in UK which will show how inflation affects consumers in retail prices and this could reinforce a potential interest rate hike. The USDGBP is currently traded at 1.6320.

The USDCH pair made some losses during the United States session. No significant volatility was observed apart from the trough to peak 45 pip difference while the pair has been following a downtrend since 15:00 GMT time. Investors are focusing on unemployment rate figures for Switzerland which are due to be announced tomorrow, an extremely important driver for the country and its currency. The USDCHF pair is currently traded 0.9160.

The USDCAD took place with the Canadian Dollar being stronger over the American greenback. Highly important employment figures are to be released tomorrow with investors supporting the Canadian Dollar as the expected new jobs are twice as many as the previous month’s, oil prices remained steady and the Gold price recorded a new all time high. The loonie is currently traded at 0.9589

 

The value of Gold continued for a 3rd day to record fresh all time highs with today’s value reaching at USD1464.90 an ounce. The fact that interest rate hikes like today’s ECB decision usually are negative for precious metal as they incur opportunity costs for owning precious non-yielding metals. However the statement of the ECB president that it is uncertain if today’s interest rate hike is one of many triggered the safe haven nature of Gold which in times of uncertainty makes gains.

EURUSD USDJPY GBPUSD USDCHF USDCAD GOLD
OPEN

(12:00 GMT)

1.4271 84.97 1.6336 0.9175 0.9593 1458.27
DAY’S HIGH 1.4325 85.401 1.6344 0.9199 0.9618 1464.90
DAY’S LOW 1.4242 84.74 1.6278 0.9152 0.9606 1454.18
CLOSE

(21:00 GMT)

1.4301 84.92 1.6314 0.9157 0.9583 1460.69