EURUSD was effectively unchanged overall after choppy trading during the European session, ending close to the session open levels. EURUSD opened in Europe at 1.3256 after range trading during the Asian session. Better than expected German Ifo business sentient data saw the pair spike to 1.3262 before dipping sharply to 1.3191 on profit-taking, then bouncing back up to 1.3258 after some positive comments from German Chancellor Angela Merkel.
Merkel signalled Germany is closer to agreeing to beef up the euro zone firewall, with a combination of the resources of the European Financial Stability Facility and the European Stability Mechanism. This helped Italian and Spanish bond yields ease. Italian 10-year yields dropped below the psychologically important 5 percent level.
GBPUSD 1.5856 and tracked the EURUSD by taking a dip to 1.5800. Sterling was lifted after a UK based survey, the Citi/YouGov inflation expectations survey showed a drop in UK inflation to 2.7 percent in March from 2.8 percent previously. The longer term inflation expectations are expected to remain stable at 3.4 percent. GBPUSD rallied back up to 1.5893.
The yen weakened against the dollar, extending losses from the prior Asian session. USDJPY opened in Europe at 82.59 and climbed to 82.99 as the dollar gains strength against yen ahead of the Fed Chairman Ben Bernanke speech today during North American trading hours. Markets will focus on any signs of further quantitative easing.
EURJPY jumped to 110.04, recovering from a session low of 109.16. Yen also weakened against the Australian dollar, as AUDJPY rose to 86.96 from an early session low of 86.13.
USDCHF negated all gains made during the European session. After rising to a high of 0.9135, the pair fell back down to the session open level of 0.9089, as risk appetite improved on talk of Germany to agree to increase the rescue fund.
Better market sentient lifted commodity-linked currencies like aussie and the Canadian dollar. AUDUSD rose to 1.0483 from 1.0425, while USDCAD fell from 0.9998 to 0.9958.