Forex Market Review – Dollar rebounds on softer risk appetite

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The euro slid during European trading hours, being pressured down by a stronger dollar today. EURUSD opened in Europe at 1.3231 and fell to 1.3171. The greenback gained across the board due to damp risk appetite amid worries over China’s growth outlook.

The ICE dollar index which measures the dollar performance against six major global currencies, climbed to 79.673 from 79.451 late Monday.

GBPUSD opened in London at 1.5867 following a slide from the Asian session, Sterling extended the decline but briefly gained after softer U.K. inflation data which showed a decline in CPI (consumer price index). The gain was not sustainable against a stronger dollar and GBPUSD slid down to 1.5829.

EURGBP dropped sharply after the U.K. CPI data, falling to a session low of 0.8314 from a high of 0.8343. GBPAUD hit ten-week high of 1.5128, rising from 1.5004.

EURJPY rose to a five-month high of 110.81, tracking the rise in USDJPY. This was the highest level since the Bank of Japan currency market intervention to weaken the yen on October 31. The pair soon gave up all gains and fell back down to 110.28. USDJPY was on the upside, rising to 83.82 from 83.43.

The Swiss franc has overlooked strong Swiss data, which showed industrial orders rose. The broadly stronger dollar pushed USDCHF back up to 0.9152, to recover from a steep fall on Monday to 0.9110. The Swiss currency outpaced the euro, pressuring EURCHF down to 1.2053.

USDCAD bounced as the greenback pushed its recovery envelope from yesterday’s 17-day low of 0.9859 to a high of 0.9935 as the commodity price-sensitive loonie suffers on the back of damp risk appetite. Falling crude oil, which is Canada’s major export, did not help. Oil prices tumbled to US$106.81, versus Monday’s high of US$108.22.

The growth-sensitive Australian dollar was hurt by concerns of slower growth in China, its major export partner. AUDUSD dipped to 1.0475, falling from the Asian session high of 1.0623 after comments from the world’s largest mining company, BHP Billiton, which said China’s iron ore demand is flattening.