Forex Market Review – Euro falls after poor US data dampens sentiment

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The euro turned down against the dollar to pare all gains made in the European session after a series of disappointing US economic data dampened the previous upbeat market sentiment. Worse than expected data for US home prices and a decline in consumer confidence as well the Chicago-area manufacturing index all highlighted the still sluggish US economic recovery.

Adding to weaker sentiment is fading enthusiasm over a Greek debt agreement. Earlier in the day, optimism for a deal by the end of the week helped lift the single currency. EURUSD rose to 1.3212 in the European session but soon fell to 1.3042 late in New York trading.

Euro slipped 0.2 percent against the Swiss franc reaching near the 1.20 franc floor established by the Swiss National Bank on September 6. EURCHF fell to a three-month low of 1.2032.

GBPUSD hit a ten-week high of 1.5795 and found support at 1.5744. Sterling strength was due to end-of-month repositioning. Sterling gained ahead of key PMI data due on Wednesday which is forecast to show expansion from previous month.

The Canadian dollar gave back earlier gains against its US counterpart after GDP data showed the Canadian economy unexpectedly contracted 0.1 percent in November for the first time since May. The Canadian dollar had reached a three month high against the greenback in European trading due to risk appetite from an agreement on a new European rescue fund. But after the poor GDP data, USDCAD soon rebounded to 1.0052 from 0.9964.

USDJPY remains range bound between 76.14/40 while EURJPY tumbled to 99.53 from 100.86.