Forex Market Review – Euro briefly rallies on Spain aid deal before resuming decline

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Euro was steady for most of the relatively quiet European trading session. The single currency was buoyed by news from the Eurogroup meeting that an agreement has been made by EU finance ministers to outline an aid package for Spain. About 30 billion euros will be made available to Spain’s financial sector by the end of July and the loans will not require a sovereign guarantee, and thus will not add to the Spanish government’s liabilities.

 

EURUSD traded to a high of 1.2332 from the Europe session low of 1.2280. The pair began to drop lower towards 1.2261 going into the New York trading session as U.S. investors are concerned about the euro zone crisis and disappointing Chinese growth data from earlier today.

 

Sterling saw a 0.3 percent jump against the dollar after the release of better than expected UK industrial production (less contraction) and trade data (narrowed deficit). GBPUSD rose to a high of 1.5548 but soon eased lower  towards 1.5492 after comments from BOE Governor Mervyn King. King said that the UK  economy was not showing signs of an impending recovery and he expressed concern about the outlook for exports.

 

USDJPY was sent lower to reach 79.20, the lowest level so far this month. Market uncertainty is keeping safe haven flows to the Japanese  yen. EURJPY see-sawed from 97.30 to 97.90 and back down to end flat in the European session.