Forex Market Review – Euro falls below $1.24; yen gains on safe haven demand

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Euro broke below $1.24 today, extending its fall during the U.S. session  as risk aversion dominates the markets as deterioration in Spanish fiscal and financial conditions cause further European financial market turmoil. Surging Spanish bond yields to record highs near 7 percent pose huge risks to Spanish sovereign debt and credit markets. EURUSD fell to 1.2360 in the U.S. trading session, the lowest level since June 2011.

 

Sterling tumbled against a broadly stronger dollar despite some positive data coming out of the U.K. GBPUSD slid to a four-month low of 1.5475 in the New York trade, down 1 percent on the day. The headline-driven market will pressure the pound lower as market participants scale back their appetite for risk and flee to the safety of the dollar.

 

Yen was the strongest performer as it is perceived to be the best safe haven currency. USDJPY plunged 0.7 percent today to reach a low of 78.85 in the North American session. Weaker than expected US pending home sales accelerated the drop, with the data showing sales declined by 5.5 percent  in April, missing estimates for a flat print of 0.0 percent.  EURJPY sunk to a four month low of 97.74. Euro is down 8 percent against t the yen this month.

 

The Australian dollar underperformed against the US dollar with a decline of more than 1.15 percent during the the session. In addition to European debt woes weighing on high yielding assets like the aussie, weak Australian retail sales data today dragged the currency down.  AUDUSD fell to 0.9704 in New York trading.

 

The Canadian dollar softened against its US counterpart, as crude oil, a major Canadian export, tumbled by over US$3 today. USDCAD rose to a high of 1.0309.