Forex Europe Review – Euro and Sterling fall, Dollar rises after inflation data

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The Euro dropped to its lowest level against the Dollar this month due to the inability of the E.U. to break a deadlock on how to deal with the Greek debt crisis. Officials at an emergency meeting in Brussels yesterday could not agree on the terms of a second aid package for Greece. Meanwhile in Athens a 24-hour general strike is bringing the nation to a halt today. Adding to market jitters was a report that Moody’s might cut the ratings of major French banks such as BNP Paribas SA, Societe Generale SA and Credit Agricole SA, due to their holdings of Greek debt. EURUSD fell to 1.4263 from 1.4414.

 

Sterling is also suffering as investors are more risk averse, and is following the direction of the Euro. The Pound slid against a broadly stronger Dollar, after being bruised by UK employment data showing the number of Britons claiming unemployment benefits rose at its fastest pace in almost two years in May. Also, reports that UK Chancellor George Osborne would support ringfencing of British banks retail divisions to separate them from investment bank divisions. This caused further downturn in risk sentiment. GBPUSD sank to a session low of 1.6226 from the open of 1.6370.

 

The Swiss Franc slipped against a broadly firmer Dollar, resulting in a new two week high for the USDCHF pair. Swiss economic data showed that producer price inflation declined unexpectedly last month. Meanwhile, the Swissie climbed higher against a weaker Euro as worries over Greece’s debt crisis persisted. EURCHF fell almost 80 pips to 1.2143.

 

Against the Japanese Yen, the greenback spiked to a high of 81.04 after news that U.S. inflation at the consumer level showed prices rose in May at their fastest pace since July 2008. U.S. core CPI rose slightly to 0.3 percent from 0.2 percent as expected.

 

EURUSD GBPUSD EURGBP USDCHF USDJPY
OPEN

(07:00 GMT)

1.4414 1.6370 0.8804 0.8478 80.47
DAY’S HIGH 1.4420 1.6376 0.8807 0.8525 81.04
DAY’S LOW 1.4263 1.6226 0.8772 0.8466 80.43
CLOSE

(14:00 GMT)

1.4283 1.6250 0.8788 0.8513 80.84

Note: Daylight Saving Time in effect for GMT