The Euro moved off from one-month highs against the Dollar after Standard & Poor’s announced that a debt rollover plan could put Greece into selective default. The ratings agency said that under their criteria, the French proposal of rolling over maturing Greek bonds to swap them for new 30-year bonds would be considered a default. However, speculation of a rate hike by the ECB this week will keep the Euro supported unless other ratings agency issue the same warning as S&P. EURUSD declined to a European session low of1.4494 from the earlier session one-month high of 1.4576.
Sterling has been very vulnerable recently due to a series of weak UK economic data as well as being affected by events in the Euro zone. This morning, UK construction PMI data was released in line with expectations, thereby lifting the Pound against the Dollar after the news. Additional boost was given by a UK jobs survey which indicated that hiring has been stepped up in the UK. The Reed Job Index rose to 125 from 121 in May. However, investors were quick to take profits, prefer to unwind long Sterling positions since the currency is too vulnerable to risk and events in Greece. Cable erased all gains and fell to 1.6064 after a prior high of 1.6139.
EURCHF hit a new six-week high in the session, reaching 1.2344. Sell-off in the Swiss Franc had begun after the Greek austerity vote was successful last week. Prior to that, there had been a huge build up in long CHF positions as investors were buying the Franc as a safe haven investment to hedge against the uncertainty surrounding Greece, fearing a Greek default prior to austerity measures being approved. The Swiss currency also weakened against the Dollar as USDCHF edged up to a session high of 0.8499 from the open of 0.8476.
The Japanese Yen lost all gains made against the US Dollar form the previous Asian session when it profited from positive Japanese monetary supply data which gave rise to speculation that the BoJ could raise interest rates. USDJPY rebounded from a European session low of 80.52 to rise to 80.80. This is not necessarily due to USD strengthening but mainly due to profit taking and sovereign buying of the weaker Dollar.
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