The Euro declined considerably during the New York trading session after hitting a 4 and a half month high yesterday. EURUSD plunged over 115 pips from the European intraday high of 1.4213 to touch the lowest level of 1.4099 in the later American session. Despite the disappointing U.S. housing data, the Dollar only temporarily lost around 40 pips against the Euro a few minutes after 14:00 GMT. The latest data on existing home sales in the United States were released indicating that the housing market crisis is not over yet, as February data reported a worse than expected decline of 16.9% and a record low 250,000 annual rate. The greenback soon regained momentum again as the Portugal debt crisis weighs down the Euro. The EURUSD pair is currently trading at 1.4118, after hitting a European session high of 1.4122. Doubts about the Portuguese debt problem has brought back risk aversion. All eyes are on the Portuguese Parliament and whether the opposition will back new austerity measures.
Sterling traded close to a two-day low against the U.S. dollar reacting to the U.K. government revising down its economic growth forecast for 2011. Inflation is expected to stay above target until 2012. During his budget speech, the Chancellor of the Exchequer mentioned that the government will have to borrow more than forecast. Additionally the Bank of England’s minutes gave an indication that a rate hike in the near future was not likely due to rising oil prices having an effect on economic growth. GBPUSD opened the U.S. session at 1.6267 and hit a low of 1.6218, losing as much as 162 pips from the European session high 1.6381. Cable has since consolidated and is trading within a range, currently at 1.6237.
The USDCAD touched a new high since March 18th to peak at 0.9842 but soon slipped in the U.S. session touching a low of 0.9790 shedding 52 pips. As crude prices rose for most of the day, this helped support the Loonie. However the USDCAD pair managed to rebound after the sharp dip and is beginning to trade upwards at time of writing in the later part of the U.S. session, currently at 0.9805, gaining 15 pips from the low.
Gold reached a new all time high today as investors took into account the Portuguese Parliamentary vote on the new budget and austerity measures. Concerns of a new debt crisis and contagion in the Eurozone were relived as a nightmare scenario of Portugal failing to pass austerity measures is foreseen by some, especially if the present government is toppled after the vote. The Libyan crisis is still in the picture as well. Spot gold hit a high of USD1440.83 jumping 77 pips in the US session and is currently trading at USD1438.35.