EURUSD fell more than one percent in the European session to reach a three-week low as euro remained pressured in the aftermath of the Greek Prime Minister’s decision to hold a referendum on the bailout deal reached with European leaders last week. Such a move could jeopardize the bailout and lead to Greece defaulting said Jean-Claude Juncker, the chairman of the Eurogroup countries. His comments accelerated a fall in the euro. EURUSD opened Europe at 1.3767 and dropped to a session low of 1.3607.
GBPUSD fell over 133 pips as markes were rattled by Greece’s referendum announcement, which battered risk sentient as renewed concerns of the debt crisis spreading to the rest of Europe grappled investors who sold off risk and turned to the safe have liquid US dollar. GBPUSD fell to a low of 1.5889 from the London open of 1.6023. Meanwhile, against the euro, sterling gained 0.5 percent as EURGBP plummeted to 0.8547 from 0.8592.
USDCHF benefited from the uncertainty in the market as investors turned to the safety of the dollar which rose 1.5 percent to hit a session high of 0.8959. The euro could not fall further against the Swiss franc because of 1.20 francs floor the Swiss National Bank set on September 6 when it pegged the euro to the franc in an effort to curb franc strength, which was hurting Swiss exporters. Rumours of lifting the floor to 1.22 francs actually lifted euro to that level today.
USDJPY traded a much tighter range today between 78.00 – 78.28. The yen has been struggling to weaken despite the Bank of Japan intervention on Monday to curb its strength and has been trading sideways since then.
USDCAD surged 1.5 percent in European trading as the Canadian dollar weakened against its US counterpart to slip below parity as fears over the euro zone debt crisis and the collapse of US broker MF Global battered sentiment. Also weak China PMI darkened the global growth outlook. Meanwhile since late last night’s shock announcement by Greek PM Papandreou for a referendum on Greece’s bailout thrashed any risk sentiment that was available. USDCAD jumped to 1.0184 from 1.0037 in Europe trading. Upcoming US economic data on ISM manufacturing is due out at 10 a.m. (1400 GMT) which will determine USD direction, while the Federal Reserve is scheduled to begin its two-day policy meeting.
Gold extended losses today in line with the plunge in the euro after Greece shocked markets with a call for a referendum on its international bailout package, to worsen euro zone money market stress for a third straight day. A stronger US dollar pressures gold prices because the two have an inverse relationship since gold is priced in dollars. Gold fell to $1,681.05.