The dollar extended gains in the US trading session due to risk aversion arising from China growth concerns and renewed fears over the euro zone debt crisis. Markets were cautious going into the weekend.
The euro fell sharply due to a combination of these factors. Spanish bond yields rose again today to as high as 6 percent, reviving concerns of debt contagion in the euro zone. Meanwhile, earlier in the Asian session, market sentiment was dampened after China posted lower GDP numbers, spurring global growth concerns.
EURUSD fell to a session low of 1.3068, falling over 130 pips on the day.
GBPUSD was also lower on risk aversion, dropping to 1.5840, down 0.8 percent on the day.
EURJPY was weighed by a broadly weaker euro and fell to 105.73 from 106.73.USDJPY was little changed in the US session, trading a range of 80.89 – 81.12.
The Australian dollar reacted strongly to the Chinese growth data because Australia’s commodity-driven economy relies heavily on Chinese demand. China’s GDP grew less than forecast in Q1 at 8.1 percent which was the weakest in three years and below market expectations for growth of 8.3 percent. AUDUSD tumbled to 1.0355, which was 95 pips lower than the day high.
The Canadian dollar weakened against its US counterpart, also affected by the China data since the CAD is a commodity-linked currency. USDCAD rose to 0.9988 from 0.9925. Lower oil prices also weighed on the loonie. Crude oil, a major Canadian export, fell below US$103 today on the disappointing Chinese data.