Forex News Review – Euro fluctuates as European leaders disagree on crisis plan

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EURUSD had a mixed day today, making gains in European trading, then fell sharply in the early US session as concerns grew over whether any concrete measures will be taken at the EU Summit this weekend to resolve the sovereign debt crisis since divisions are strong between France and Germany on how to deal with the crisis. A deadlock over proposals to leverage the European Financial Stability Facility (EFSF) has prompted a second summit to be scheduled for October 26, three days after the first Summit. This announcement lifted sentiment and helped euro rebound as it gave optimism that more time will be spent by European leaders to work on a crisis plan. EURUSD began the NY session at 1.3809 and dropped to 1.3655 before bouncing back up to 1.3782. Meanwhile the Greek government is voting for new austerity measures which are expected to pass so that Greece can receive more international aid to prevent default.

 

GBPUSD movements were largely driven by news headlines today, with the main focus being on Europe. The pound weakened early in the US trading session against the dollar disagreement among the European leaders on a plan to resolve the debt crisis pushed investors to seek out safer investments. GBPUSD fell to 1.5680 from 1.5787. Risk appetite returned later in the session to lift the pair back up to 1.5798.

 

The Canadian dollar pared losses made early in the NY session against its US counterpart as market sentiment improved on optimism that European leaders will be able to solve the region’s debt crisis next week. The Canadian loonie gained back all losses after USDCAD fell from high of 1.0235 down to 1.0130.

 

USDCHF see-sawed as the push-pull of the euro zone efforts to come up with a plan to address the region’s debt crisis continued. Investors are confused as there has not been any clear direction on developments in Europe. So investors reacted to every news that came out today making for very volatile trading. USDCHF opened New York at 0.8954, rose to 0.9008 on risk aversion and demand for the safe haven dollar, then fell to 0.8935 as some positive news came out of Europe.

 

USDJPY opened New York at 76.82 finally broke out of its 76.66-76.84 range it has been trading all week, to surge to a high of 77.08 following positive US economic data that showed initial U.S. weekly jobless claims fell in the latest week from previous week. EURJPY fell half way into the session to 105.00 the bounced to 105.93.