The euro swung from gains to losses in the U.S. trading session after news reports the European Central Bank has stopped providing liquidity to some Greek banks as they are severely under-capitalized. This added to bearish sentiment as Greece faces political uncertainty going to another round of elections in June. Euro briefly dipped below $1.27 in reaction to the news, nearing a four-month low. EURUSD touched 1.2687 and last traded at 1.2702 towards the end of the session.
Sterling weakened against the dollar after the Bank of England issued a weaker growth outlook in its quarterly inflation report today. GBPUSD fell to a four-month low of 1.5888 in the London session and consolidated around those levels in the U.S. session. EURGBP rose on the back of a weak pound to move off a 3-1/2 year low gaining some 60 pips to 0.8006.
USDJPY rose to a two-week high of 80.54 after data showed U.S. housing starts rose more than expected in April. But dollar lost ground and fell to 80.18 yen after the minutes of the Federal Reserve April meeting were released late in the U.S. session. The minutes suggested some FOMC committee members considered more stimulus for the economy based on a gloomy growth outlook. This usually would be negative for the dollar.
The Australian dollar was weighed by risk aversion, as slower global growth would hurt the commodity-linked aussie. AUDUSD swung from a high of 0.9966 to a low of 0.9902.
The Canadian dollar, also a commodity-linked currency also weakened, with USDCAD rising to 1.0126 from 1.0053.