Forex Market Review – Euro lower but steady ahead of ECB meeting

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Euro steadied in the U.S. session after falling sharply against the dollar in the European session when the Spanish Budget Minister Cristobal Montoro said Spain is facing difficulties in accessing the capital markets, causing concerns of requiring a bailout.

 

G7 finance ministers held a conference call today to discuss financial and fiscal union in Europe and said they will speed up their efforts to resolve those problems, which was encouraging to markets. But in essence there was an absence of any concrete news and so market will probably take a wait and see approach and turn their focus on the European Central Bank policy meeting on Wednesday.

 

EURUSD went in to the U.S. session with lows of 1.2428 and rose to a high of 1.2468.

Sterling moved little due to U.K. markets being closed again today for the Queen’s Diamond Jubilee holiday. GBPUSD traded between  1.5334 and 1.5386.

 

The dollar got a boost against the yen on some positive economic news from the U.S. The Institute for Supply Management’s index of non-manufacturing businesses showed expansion in May and rose to 53.7 percent from 53.5 percent in April.     The dollar was up 0.5 percent above Friday’s 3-1/2-month low of 77.65 yen. Investors were still wary about the possibility of Japanese authorities intervening to curb yen strength. EURJPY hit a high of 98.31 .

 

The Canadian dollar strengthened from almost a six-month low after the Bank of Canada had a hawkish tone after its policy meeting today when it left interest rates unchanged at 1 percent but said they may rise since the domestic economic recovery was proceeding as forecast. USDCAD fell to a session low of 1.0360 after the BOC meeting.