The Euro made significant gains against the U.S. Dollar today, with the EURUSD pair reaching its highest level of the year at 1.4182, beating the November 2010 high of 1.4281. Much of the boost to the Single Currency was given by the G7 intervention to help Japan weaken its currency, resulting in the selling off of the Yen and acquiring of the Euro. ECB President Trichet spoke at the European close reiterating his strongly vigilant stance on inflation, making investors speculate that the ECB will go ahead with a rate hike despite the Japanese disaster.
Additionally, investors selling off the U.S. Dollar are placing downward pressure on the greenback as it is continued to be undermined as long as the Federal Reserve is expected to go on with their $600 Billion reinvestment into the market place in the hope of stimulating economic growth. The effect of an excessive supply of Dollars in the financial system will artificially bring down the Dollar. The EURUSD is currently trading at 1.4166.
GBPUSD continued its rise today to hit 1.6255, gaining 96 pips from the open of New York at 1.6159. Investors expect the Cable to remain in range while the Dollar is consolidating against all its majors, and the Pound will be depressed by general weakness of the U.K. economy.
USDCAD rebounded in the U.S. trading session, from a low of 0.9803 rising almost 60pips to hit a day high of 0.9862. The Canadian Dollar weakened after the release of CPI data which came out worse than expected, with the monthly CPI reporting no change at 0.3% while the yearly figure dropped slightly to 2.2%. The core CPI increased to 0.2% over the month, while year on year it moved down to 0.9% from 1.4%.
USDCHF surged today in the early part of the U.S. session jumping over 70 pips to hit a high of 0.9058. The pair soon lost ground after the Swiss Franc was strengthened by renewed demand for the safe haven currency due to new reports coming out of Libya. Prior rumours of a ceasefire were shot down after new reports of continuing firing in the country. The risk of foreign intervention remains imminent. The pair is currently trading at 0.9007.
The USDJPY fell to 80.50 from the U.S. session high of 81.73. It was a much expected event that the pair would push back down after the G7 intervention when it surged. Investors went back to buying Yen while selling off the Dollar which weakened across all of its majors today, due to the Fed’s plan to inject $600 billion into the U.S. economy.
Gold continued its rise for a third straight day today hitting a new week high of 1423.70 as political tensions remained high across the Arab world, heightened especially by the realization of a false ceasefire in Libya. The precious commodity also gained from a weaker dollar as traders prepared for more action after the G7 countries coordinated to intervene on the Japanese Yen. Spot gold is currently trading at 1418.28.