Daily Market Review – United States Session-Euro hits new 4 ½ month high against the U.S. Dollar

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The Euro managed to hit a new 4 ½ month high today. Expectations that the European Central Bank will increase interest rates in April has investors demanding the Single Currency despite the debt crisis in the peripheral countries of Greece, Portugal, Ireland and Spain. The EURUSD pair surpassed yesterday’s multi-month high by 83 pips climbing to 1.4247, the highest since October 31st level of 1.4281. It retreated upon the opening of New York, losing some 61 pips to hit a low of 1.4178. It is possibly more of a technical retracement since the common Currency is supported by the ECB’s rate hike expectation. EURUSD is currently trading at 1.4205 in the U.S. session.

 

The Sterling reached a new 14 month high of 1.6400 today against the U.S. Dollar in mid European session after hawkish inflationary data from the UK was released. Public Sector Net Borrowing for February came out at 10.28 Billion, well above the expected value of 5.7 Billion. The GBPUSD remained on high ground and traded within a tight range all throughout the U.S. session and is currently trading at 1.6376. Tuesday’s Bank of England minutes may see the Pound break past the 1.6400 level should the minutes show a hawkish tone by the policymakers.

 

The Canadian Dollar strengthened against its U.S. counterpart in early morning trading benefiting from higher commodity prices, namely oil and gold. However, after the release of worse than expected data from Canada in the early hours of U.S. trading, the USDCAD pair began to move up. The pair had earlier touched as low as 0.9752 as high crude oil prices boosted the Loonie. The pair’s trend will depend on where oil prices will go from here and how the situation develops in Libya.

 

The USDCHF pair has been trading sideways in the past week since reaching and all time low on March 16th. The Swiss Franc was supported by the geopolitical events that were happening recently, in Japan and Libya, helping the safe haven currency. However, as the situation of the nuclear crisis in Japan is more under control and with the major powers intervention in Libya, the pressure on the pair has eased off slightly. USDCHF is currently at 0.9031.

 

Gold futures traded slightly lower today as fears have been calmed after Japan’s nuclear crisis is under control. Investors are more willing to move away from the safe haven investment and back to the U.S. Dollar, giving the greenback a slight boost in the U.S. trading session. The price of gold generally tends to have an inverse relationship with the U.S. Dollar, meaning that as gold prices rise, the value of the Dollar declines. Gold futures for June delivery hit a day high of USD1,432.95 an ounce. Spot gold prices came down from yesterday’s four-day high of USD1,434.63 and is currently trading at USD1,425.93 near the close of the U.S. session.

EURUSD USDJPY GBPUSD USDCHF USDCAD GOLD
OPEN

(12:00 GMT)

1.4240 80.92 1.6374 0.9026 0.9757 1425.25
DAY’S HIGH 1.4242 81.06 1.6390 0.9046 0.9812 1428.81
DAY’S LOW 1.4178 80.87 1.6359 0.9024 0.9752 1419.36
CLOSE

(21:00 GMT)

1.4195 80.96 1.6363 0.9033 0.9807 1427.45