Forex Market Review – Euro drops to 11-year low against yen

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Euro edged lower during the U.S. session to a fresh 23-month low against the dollar. A string of soft U.S. economic data dragged down the single currency down to reverse earlier gains made in European trading.  Data showed the U.S. economic growth slowed in the first quarter and the Chicago purchasing managers index sentiment gave a lower reading. Also fewer jobs were created according to the ADP employment report. This comes ahead of the closely watched non-farm payrolls report due on Friday.

 

EURUSD fell to a session low of 1.2335, marking a fresh low since July 1, 2010. Meanwhile, concerns about the euro zone debt crisis continue to dominate market sentiment as Spanish bond yields remain near record highs on fears Spain would resort to a bailout.

 

Sterling tumbled to a four-month low against the dollar as worries about the extent of Spanish debt woes and slower U.S. growth drove investors away from risk and into safer assets.  GBPUSD fell to a low of 1.5359, its weakest since mid-January. Month-end related selling of sterling against the euro partly pushed up EURGBP to 0.8034.  The focus will switch to the latest purchasing managers survey for UK manufacturing activity PMI on Friday. This is expected to show the sector slipped into the contraction phase in May.

 

Yen rose to a more than an 11-year high against the euro during the U.S. session as safe haven demand boosted the Japanese currency amid a deepening European crisis and slowing U.S. growth. EURJPY fell more than 1 percent to 96.50, the lowest since December 2000.  The dollar was down 1 percent versus the yen, with USDJPY touching 78.20, its weakest levels since February.

 

The Canadian dollar plunged to its weakest level in more than five months against its U.S. counterpart after weak data from the U.S., which is Canada’s major trading partner. The riskier loonie was sold off for the safer greenback. Falling crude oil, a major Canadian export, also weighed on the commodity-linked CAD. Crude fell to a 7-month low of US$85.85 in New York trading.