Forex Europe Review – Sterling suffers after weak PMI, Swiss Franc falls on reduced safe haven demand

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The Euro descended from its highest level in three weeks against the Dollar, erasing all gains made yesterday. After the euphoria of the Greek voting in the past two days, investors took the opportunity to book profits before the long weekend, due to the U.S. Independence Day holiday (4th of July). The absence of significant news didn’t provide any opportunity for a rally. Economic data that came out of the EU was flat. Both PMI and the unemployment rate remained unchanged, at 52.0 and 9 percent respectively. EURUSD fell from the high of 1.4550 to 1.4477.

 

Sterling fell across the board following poor UK manufacturing data. The PMI index fell in June to its lowest level since September 2009 indication that the British economy is still struggling to recover. The spate of weak data recently reinforces the market view that the Bank of England would unlikely raise interest rates at all this year. The Pound fell to a 15-month low against the Euro which is supported by expectations that Euro zone interest rates will rise next week. EURGBP hit a high of 0.9082 from 0.9025. GBPUSD fell to 1.5987 from 1.6095.

 

The Swiss Franc fell against most counterparts following the release of Swiss manufacturing data. The PMI index fell in March to 58.4 from 59.3, the lowest level since February 2010. Meanwhile what also weakened the Franc is lower demand for its safe haven status as fears of a Greek default have now eased after successfully voting in austerity measures and legislation. USDCHF rose to a high of 0.8473 from the open of 0.8427. EURCHF peaked at 1.2300 from 1.2231.

 

The Yen was flat against the Dollar but gained against the Euro and Sterling. EURJPY fell to 116.85 from 117.34 and GBPJPY fell to 129.03 from 129.88. USDJPY traded in a range between 80.79 and 80.54. Investors believe Japan is going to recover after the March earthquake and that the slump in the economy is temporary due to that event. A slight fall in the Japanese unemployment rate today indicated that business are starting to rehire.

 

EURUSD GBPUSD EURGBP USDCHF USDJPY
OPEN 

(07:00 GMT)

1.4514 1.6006 0.9031 0.8427 80.69
DAY’S HIGH 1.4550 1.6095 0.9082 0.8473 80.74
DAY’S LOW 1.4477 1.5987 0.9025 0.8423 80.54
CLOSE 

(14:00 GMT)

1.4483 1.6022 0.9038 0.7465 80.72

Note: Daylight Saving Time in effect for GMT