Forex European Session Trading News – Dollar off record lows following Trichet’s Speech

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The Euro has sustained massive loses over the Dollar today. The losses were a result of the speech by a speech given by the European Central Bank president explaining his reasons why the interest rates remained steady at 1.25%. Jean-Claude Trichet on his speech stated that the economy should be “monitored very closely” which meant that the next possible interest rate hike move will not be in June but in July. This announcement has caused the Euro over 125pips bringing it to a 2-week low.

Against the Sterling the single currency made gains initially extending the EURGBP pair 13-month high at 0.9042. This was a result of weak PMI services data in the UK bringing bearish news for the 3rd straight day in UK. The Sterling however managed to cover these losses and ended the session with gains. Especially after Trichet’s speech the Euro dropped over 60pips against the sterling capping all the gains it made during the previous 3 days.

The Sterling extended its losses against the Dollar during the EU session as a result of the weak PMI services figures. This announcement has caused the Sterling over 40 pips within a minute while prior to the announcement the Sterling had already lost another 40pips.. Later in the session the Bank of England announced its monetary policy to keep interest rates at the 0.5% rate a decision that did not generate any volatility for the Sterling as it was vastly expected. The Dollar was boosted towards the end of the session where Trichet announced he believes in the importance of a strong Dollar.

The Swiss Franc today had a sluggish 45 pips session until Jean-Claude Trichet gave his speech. The ECB president stated that he agrees with Bernake on the importance of having a strong Dollar that caused the Dollar to rise a near 80pips against the Swiss Franc. This rise helped the Dollar recover from the record low levels against the Franc bringing it at a 3 day high.

The Japanese Yen made massive gains over the Dollar today recording a new record high. Unlike all the other currencies that made big losses against the Dollar the moment of Trichet’s speech the Yen managed to keep its gains. This was the lowest the USDJPY has ever reached following the G7 intervention.

 

EURUSD EURGBP GBPUSD USDCHF USDJPY
OPEN

(07:00 GMT)

1.4869 0.8998 1.6522 0.8591 80.46
DAY’S HIGH 1.4939 0.9041 1.6543 0.8663 80.48
DAY’S LOW 1.4677 0.8925 1.6441 0.8556 79.84
CLOSE

(14:00 GMT)

1.4704 0.8933 1.6459 0.8644 79.78