Forex News – Euro rebounds on news of Greece receiving next aid installment soon

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The euro reversed earlier losses in reaction to news that Greece will be receiving its 8 billion euro aid tranche. The president of the European Council, Herman Van Rompuy, said the euro zone finance officials are ready to sign off on the agreement next week. This helped euro rebound against the dollar to trim losses made earlier due to Spanish bond yields continuing to rise as they were sold off on Monday. Spanish election results from Sunday failed to calm investors that governments can deal with the debt crisis. Moody’s warned that slowing growth in France could threaten its credit rating to be cut from AAA. EURUSD bounced off 1.3437 to rise to 1.3540 in North the American session.

 

Sterling fell 1.2 percent against the dollar today as euro zone debt woes and the failure of U.S. policy makers to agree to deficit-cutting measure led to a broad sell-off in riskier assets. Weak UK data also weighed on the pound. UK housing data showed prices fell by the most in a year amid increasing concern that the economic growth outlook is deteriorating. GBPUSD touched a six-week low of 1.5611 after falling from 1.5792.

 

The Canadian dollar weakened 1.4 percent on the day against the US dollar on damp risk sentiment. Debt issues in both European and the United States prompted a global selloff in riskier assets. Commodities tumbled, which weighed on the commodity-price sensitive loonie. Canada’s major export, crude oil, fell to as low as US$95 versus last week’s US$103 a barrel. USDCAD hit a six-week high of 1.0417 from 1.0272.

Gold tracked equity markets to fall to a four-week low of $1,666.33. The precious metal lost 3.5 percent on the day as prices fell $1,700 an ounce for the first time since October 25 on worries about a potential credit crunch in Europe and budget gridlock in the U.S. which spurred traders to sell the precious asset to raise cash.