Forex Market Review – Euro rallies as focus is on Greek debt talks; Canadian dollar gains

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The euro surged against the dollar to reach its highest level in three weeks on optimism that a Greek debt deal will be reached. Investors seemed to shrug off any uncertainties on the deal ahead of the euro-zone finance ministers meeting in Brussels this Monday where the Greek situation is on top of the agenda as well as EU budget rules and other plans to tackle the debt crisis.

EURUSD rose to 1.3051 halfway into the New York trading session, its highest level since January 4, and up 1.37 percent on the day.

 

Against the yen, the euro rose 1.2 percent today to a high of 100.37, its highest since December 30.

 

The improvement market sentiment pushed investors out of the safe haven dollar to riskier assets, thereby weakening the greenback across the board. The U.S. dollar index, which measures the USD performance against a basket of six currencies, fell to 79.795 from 80.148.

 

The dollar hit its lowest level against the Swiss franc since December 21 at 0.9251.

Sterling rose against the dollar to new two-week highs, hitting 1.5601 in the US session.

Dollar weakness can also be attributed to growing speculation that the US Federal Reserve may continue to easy monetary policy in its meeting this week on Wednesday.

 

The Canadian dollar touched a two and a half month high against its US counterpart partly due to optimism for a Greek debt restructuring deal, and partly due to rising oil prices. Canada is a major oil exporter and the loonie is sensitive to prices changes in oil. USDCAD moved lower to 1.0051 from the Asian session open today of 1.0141.