Forex Market Review – Euro off lows as Merkel Sarkozy meet; CHF jumps as Hildebrand quits

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Euro got a boost during European trading, rising well off a prior 16-month low to crawl back up by almost 1 percent to 1.2784 against the dollar. Market sentiment was bolstered ahead of a meeting between German Chancellor Angela Merkel and French President Nicholas Sarkozy in Berlin today. There is optimism that the two leaders will finalise a deal on closer budgetary ties within the currency union and discuss how to boost growth in euro zone states.  Euro was further boosted after German data showed Germany’s trade surplus grew by more than expected. However later  in the session, German industrial data disappointed by reporting weaker than expected numbers, showing a drop in factory output by 0.6 percent in November versus a prior growth of 0.8 percent. EURUSD fell to a session low of 1.2724.

EURGBP inched up to 0.8276 from 0.8243.

Against the Japanese yen, the euro traded up to 98.24 yen, up one percent from early Asian trading after touching its lowest level versus the Japanese unit since late 2000.

The dollar weakened this Monday as a result of the rise in the euro, leading to a drop in the dollar index  , which tracks the U.S. currency against six others. The index traded at 81.114, slipping from 81.263 on Friday, the highest in a year.

USDJPY traded down to 76.76 from 76.92, down from Friday’s 77.32.

Against the Swiss franc, dollar fell from the European session open level of 0.9543. The franc jumped sharply late in the session in reaction to the announcement of Swiss National Bank chairman Hildebrand resigning amid a scandal regarding a controversial currency trade by his wife. USDCHF dipped to 0.9489 immediately after the news, while EURCHF tumbled to  1.2105

Among other major currency pairs, the British pound edged up to $1.5467 against the dollar from 1.5426, while USDCAD fell to 1.0252 from 1.0303.