Forex Market Review – EURUSD hits 6-week high

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EURUSD soared to the highest level in over six weeks amid optimism that the Greek debt talk will be concluded by this weekend with a deal on the haircut private creditors will be taking on their holdings of Greek debt. Euro was only briefly hurt by the Fitch downgrades of five euro zone countries but none were AAA rated countries. After falling early in the session to 1.3092 in a negative reaction to US GDP data, the euro quickly rebounded.

EURUSD rose to 1.3218 in New York trading, the highest since December 13. This week has been the euro’s best monthly advance since October and gained 2.3 percent on the week versus the dollar, on track for its best weekly gain in three-and-a-half months.

Sterling gained for the second straight week against the dollar, advancing 2.7 percent over the period. GBPUSD tracked gains in the euro-dollar and hit a new one-month high of 1.5738 in the US session.

The dollar fell over 1 percent against the yen this Friday, mostly due to the broad weakness in the safe haven greenback but also due to end-of-the-month buying by Japanese exporters which helped support the yen.  USDJPY fell to 76.64 from the day high of 77.48.    With interest-rate differentials moving in favor of the yen, the dollar is likely to remain subdued against the yen.

Dollar also fell against the Swiss franc. USDCHF dropped to 0.9114 from the US session high of 0.9211.

For the week, the dollar index has declined 1.7 percent due to the upbeat market sentiment all week and especially due to the Fed’s pledge to keep interest rates low until the end of 2014.

GDP data today showed the US  economy grew in the fourth quarter of 2011 at its fastest pace in over a year.