The euro held steady up until the much anticipated Spanish bond auction which despite meeting target sale amount, resulted in higher bond yields. A good French bond auction was not enough to sustain the euro from falling against the dollar midway into the European trading session. Lingering concerns over the euro zone debt crisis, upcoming French elections, Current IMF meeting, all gave reason to put the single currency under pressure. Meanwhile, rumours of a French downgrade caused market jitters and put downward momentum on the single currency. EURUSD opened the session at 1.3113 and briefly hit a high of 1.3164 until the bond auction before falling to 1.3068.
Sterling advanced higher early in the session, still benefitting from the hawkish Bank of England policy meeting minutes yesterday. GBPUSD rose from 1.6018 to a five-month high of 1.6076 in early session trading before falling back down to 1.6008, essentially erasing all gains. Focus turns to key UK retail sales data tomorrow which will be key to the pound’s direction.
EURGBP fell further to a twenty-month low of 0.8160, dropping over 100 pips since Monday.
USDJPY advanced steadily during the European session, opening at 81.48 and rising to 81.72, a seven-day high. Yen is under pressure on speculation that the Bank of Japan will expand monetary easing. However, the dollar trimmed gains against the yen going in to the US session, after worse than expected US initial jobless claims data. The number of Americans who filed for jobless benefits totaled 386,000 last week, keeping claims at a four-month high. USDJPY dropped 0.3 percent to 81.45 after the data. EURJPY followed USDJPY and also fell to 106.51. Earlier the pair hit a high of 107.33.
Commodity-linked currencies like the aussie and loonie were hurt by risk aversion after the Spanish bond auction and words than expected US jobless claims data.
AUDUSD tumbled to 1.0317 from a session high of 1.0389.
USDCAD rose to 0.9938 from a 0.9878 low.