Forex Market Review – USDJPY hits 3-mth high; euro falls on Greek uncertainty

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The euro extended losses against the dollar in the US trading session after risk appetite turned sour on news that a meeting of euro-zone officials to discuss Greece’s bailout on Wednesday was cancelled and will take place over a conference call instead. According to reports, signing off on the 130 billion euro bailout plan will have to be delayed until a scheduled meeting on February 20.

 

The EU is still waiting for some key Greek lawmakers to sign off on the austerity deal that was voted in parliament over the weekend. Also there are further discussion with the troika about how to close the fiscal gap of 325 million euros . EURUSD fell to a low of 1.3079, versus an earlier European session high of 1.3214.

 

Market sentiment was further dampened after US retail sales data showed retail sales grew much less than forecast showing that the US economy is still not as strong. Sales rose 0.4 percent in January, lower than the expected 0.7 percent increase. December numbers were revised down.

 

GBPUSD declined to a new two-week low of 1.5643 from 1.5769. Sterling is under pressure after ratings agency Moody’s warned it could cut the UK’s triple-A credit rating. The British pound is also vulnerable ahead of the Bank of England’s latest inflation report on Wednesday, which is expected to be dovish.  Investors will watch for any clues on more quantitative easing in the future.

 

The dollar rose to its highest level since November against the Japanese yen on Tuesday after the Bank of Japan surprised the market by expanding its asset-purchase program by 10 trillion yen. USDJPY advanced to a three-week high of 78.52 in New York trading from 77.35 in early Asian trading.