Forex Market Review – Euro gains as focus shifts to ECB meeting

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The U.S. session on Tuesday was quiet ahead of the Fourth of July holiday tomorrow. Risk appetite was on after some positive economic data. Factory orders in the U.S. climbed 0.7 percent in May more than the expected 0.1 percent gain.

 

The euro continued to rally into the New York trading session, as market participants position themselves ahead of the European Central Bank policy meeting on Thursday. EURUSD peaked at 1.2626 after a brief dip early to 1.2558. Expectations are for a 25-basis-point cut in the policy rate to 0.75 percent.

 

Sterling was flat against the dollar from where it began today after a choppy day, trading between 1.5657 and 1.5707. Focus turns to the Bank of England policy meeting on Thursday when the central bank is expected to adopt further quantitative easing.

 

Yen weakened due to lower safe haven demand in a risk-on environment. USDJPY rose almost 0.5 percent to a high of 79.92 while EURJPY was up 0.7 percent to 100.82.

 

The commodity-linked Australian dollar rose to a two month high against the greenback, buoyed by rising commodity prices. Also underpinning the aussie was the Reserve Bank of Australia’s decision to leave rates unchanged  today. This reflects the improved conditions in the Australian economy. AUDUSD hit a high of 1.0295, the highest level since May 3rd.

 

The Canadian dollar hit a near seven-week high against the U.S. dollar after being lifted by rising crude oil prices. Crude oil is a major Canadian export. USDCAD touched a low of 1.0119, down 0.5 percent on the day.