Forex News Review – USDJPY falls to record low; euro gains on EU Summit optimism

Important: This page is part of archived content and may be outdated.

EURUSD soared 150 pips in the US session as euro gained across the board on a rise in risk appetite. As European leaders began to gather for a much anticipated EU Summit in Brussels, investors are optimistic that policymakers will come up with some strategy to resolve the euro zone’s debt crisis. Meanwhile, EU finance ministers approved the next aid tranche for Greece for November, helping avoid a default. EURUSD hit a high of 1.3899 from 1.3753.

 

GBPUSD hit a six-week high at 1.5960, rising from 1.5821, driven up by the rise in EURUSD. Improvement in sentiment increased appetite for the riskier pound.

 

The Canadian dollar strengthened against its U.S. counterpart, along with equities and commodities, amid optimism that European policy makers may be moving closer to containing the debt crisis. Higher than expected inflation data did help boost the loonie, but the market was mainly driven by news from Europe and what the EU Summit will bring. So risk appetite is euro-centric. USDCAD fell to 1.0065 from 1.0141.

 

USDCHF fell to a four-week low of 0.8805 from the NY open of 0.8915 open. The Swiss franc strengthened as the market feels that there is still some room for upside in the franc , as some investors prefer to take refuge in a safe haven just in case European policy makers fail to come up with a comprehensive plan to resolve the region’s debt crisis this weekend.

 

USDJPY plummeted to a record low of 75.88 early in the New York session. Traders were long dollars and had built up too many positions from last week when risk sentiment was low due to eurozone debt concerns so they were adjusting positions before the weekend and sold off the excess dollars.