The euro climbed 0.6 percent against the dollar in the European trading session to peak at a high of 1.3567. Gains were capped after a Spanish bill auction where yields rose to euro era highs on 3 and 6-month treasury bills. These unsustainable debt levels kept investors cautious. Despite this, the single currency remained steady today, even though Moody’s warned that France was at risk of losing its AAA credit rating. The resilience of the euro has more to do with short covering and position squaring ahead of the Thanksgiving holiday in the U.S this week.
Sterling fell to a three-week low against the euro despite a report that showed the UK budget deficit fell by more than expected in October. EURGBP rose 0.5 percent in the London session to peak at 0.8663 from 0.8619.The pound was also weaker against the dollar and only briefly rose after the budget data but extended its decline after. GBPUSD jumped to 1.5678 after the data then fell to 1.5582. Sterling is weak due to speculation that the Bank of England policy meeting minutes tomorrow will signal further monetary stimulus. This policy measure results in weakening the currency.
The Canadian dollar held firm against the stronger US dollar after data showed Canadian retail sales rose 1.0% to $38.2 billion in September. This marks the fifth increase in six months and was the largest advance since November 2010, indicating some growth in stores. This helped to trim losses in the loonie which has been falling against the greenback in the past few days. USDCAD was range bound today between 1.0356-1.0412. Weaker US GDP figures capped USD gains against the CAD.
The yen strengthened against the dollar in European trading. USDJPY fell from 77.07 to a session low of 76.82.