Forex Europe Review – Euro recovers after Germany votes for EFSF expansion

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EURUSD rallied to a 1.3677 session high after German unemployment data came in better than expected but the pair soon eased back after euro zone consumer sentiment data came out worse than expected. Euro got a quick boost after the results of the German EFSF vote, with reports that the German bundestag (parliament) voted in favour of expanding the rescue fund and its powers. EURUSD hit another session high close to the early session high, peaking at 1.3678 before easing off again as the euro was pressured by the dollar which strengthened after better than expected GDP data.

 

GBPUSD tracked the rise of the EURUSD pair as risk sentiment picked up on relief that the German parliament voted strongly in favour of ratifying the euro zone rescue fund’s new powers. This lifted risk currencies like the sterling to a session high of 1.5698 against the dollar. Meanwhile, the pound dipped against a broadly firmer euro, sending the EURGBP pair to a high of 0.8724 before easing off.

 

The Canadian dollar rallied against its US counterpart to strengthen overall by the end of the session, as risk sentiment improved following the German vote on the EU rescue fund which slightly eased worries about euro zone efforts to tackle the debt crisis. Better than expected GDP data from the US helped boost sentiment further, which lifted the Canadian currency. Any good news on the US economy helps Canada as well since the US is Canada’s main trade partner. USDCAD opened the European session at 1.0308 and fell to 1.0255.

 

Yen weakened against both the euro and the dollar as risk appetite improved on optimism that Europe is working hard towards stemming the debt crisis after a successful vote by the German parliament to expand the EFSF. EURJPY hit a European session high today of 104.76 versus the 104.22 opening level. USDJPY trekked up to 76.79 from an early low of 76.43, given a further boost by better than expected GDP data from the US.