Forex News – Euro buoyed ahead of Merkel-Sarkozy meeting today

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Euro gained 0.4 percent against the dollar during the European trading session on increased risk appetite, buoyed by Italy’s new 30 billion euro austerity package and also due to optimism for the Merkel Sarkozy meeting later today and the upcoming EU Summit on Friday. The German Chancellor and the French President will be discussing a proposal to present at the Summit on stronger fiscal union and to centralise control of euro zone budgets. Also in focus this week is a European Central Bank policy meeting on Thursday with speculation of a rate cut. EURUSD opened Europe at 1.3409 and peaked at a session high of 1.3459 before easing slightly on profit taking. Despite weaker than expected euro zone service sector PMI data, euro held firm.

 

The dollar slid against most of its major counterparts as investors sought higher-yielding assets due to the upbeat mood, thus diminishing the greenback’s safe-haven appeal. The dollar index, which measures the U.S. unit against a basket of six major rivals, traded at 78.400, down from 78.609.

 

Sterling moved up to a session high of 1.5662 against the dollar on risk appetite, up from the open of 1.5617. The British pound remained support after better than expected UK services sector PMI in November.

 

USDJPY traded lower in the European session versus in Asia. The dollar slipped to trade to a low of 77.89 yen from the Asian high of 78.09.

 

The Canadian dollar strengthened against its US counterpart lifted by risk appetite and rising oil prices. Crude is Canada’s major export and so any change in oil prices affect the commodity-linked loonie. USDCAD fell to 1.0139 from 1.0175 as crude rose to its highest level since November 17 due to tensions in Iran.