Forex Review – Euro rises against dollar after successful Greek CDS auction

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Euro surged to a one week high against the dollar in the U.S. trading session due to a successful Greek credit default swap auction. Greek default insurance (CDS) was paid out  in line with expectations. This means the owners of Greek CDS would be paid 78.5 cents on  the euro, enough to compensate for the roughly 75 percent loss investors incurred on the Greek debt restructuring.  EURUSD jumped to a session high of 1.3264 from 1.3151.

The euro also gained against the yen, hitting its strongest  level in the almost five months since the Bank of Japan intervened to stem its currency’s advance.  EURJPY reached  110.54, climbing steadily from an earlier low of 109.16. EURGBP bounced off a one-month low of 0.8282 to a high of 0.8342.

The U.S. dollar was generally weaker across the board, following from Friday’s softer inflation data. Meanwhile, there were no key economic data on the calendar today, except for some housing data. The NAHB housing market index fell more than expected. Also, New York Fed President William Dudley, in his speech today,  painted a mixed picture of the U.S. economy and did not mention anything about further quantitative easing.

The ICE dollar index  which measures the dollar against a basket of major currencies, traded lower at 79.626, down from 79.776 in North American trading on Friday.

GBPUSD rose steadily from 1.5845to 1.5912, the highest level since the beginning of March, as investors anticipate the U.K. budget plan to be released by British Chancellor of the Exchequer George Osborne on Wednesday.

The big gainer across the board this Monday was the Swiss franc. The swissy gained 0.5 percent against the dollar, as USDCHF plumbed to 0.9090. The franc also gained against the Canadian and Australian dollars as well as against the Japanese yen.

The Canadian dollar strengthened  against a broadly weaker U.S. dollar and was also lifted by rising crude oil, which is a major Canadian export. USDCAD slid to 0.9859 in North American trading hours, compared to an earlier day high of 0.9929. Crude oil prices peaked at US$108.22.