Forex Market Review – Euro rallies above $1.26 after China cuts rates to spur growth

Important: This page is part of archived content and may be outdated.

Euro rallied further against the dollar in the U.S. session to hit a new two-week high as risk appetite was still high following a series of positive news flow during the day. EURUSD hit a high of 1.2624 in the session, rising to the  1.26 handle for the first time since May 28.

 

Euro first got a boost in European hours, after a successful Spanish bond auction. Going into the New York open, news came out that China cut interest rates by 25 basis points to spur growth. This was significant news that lifted  most risk currencies because China is the world’s second largest economy. Also on the economic calendar today, U.S. Federal Reserve Chairman Ben Bernanke gave testimony to Congress where he said that the Fed was ready to shield the U.S. economy if financial troubles deepen, but offered few hints that further monetary stimulus was  imminent.

 

The pound rallied after the Bank of England kept stimulus plans on hold and left interest rates at record lows of 0.5 percent. No QE boosted GBPUSD to a high of 1.5599, the highest since the end of May.

 

Yen weakened further today as risk was on and demand for safe havens fell . USDJPY surged to 79.78, the highest since May 25. EURJPY hit a high of 100.61 in the U.S. session, breaking above the key 100 level today for the first time this month.

 

The Australian dollar was the strongest performer today, rallying sharply against the greenback to reach parity for the first time since mid-May. AUDUSD hit a high of 1.0001 in New York trading hours before easing on profit-taking. Earlier in the day aussie was lifted by the release of stronger than expected domestic employment data which showed Australia added 38,900 jobs in May.