Forex Review – Sterling at 3-month low, Dollar strong across the board

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The Euro weakened against most major counterparts and fell for a second day against a strengthening Dollar which was lifted after the U.S. Federal Reserve gave no hint of further monetary easing yesterday. The Single Currency was further bruised by weak economic data from France which showed weaker-than-expected flash PMI data. As well, German PMI data showed manufacturing in Europe’s economic powerhouse slowed in June. Meanwhile, the ongoing Greek debt issue continues to cloud the Euro, with the markets focused on the meeting of European leaders happening today and Friday. EURUSD dropped to a session low of 1.4152 from the open price of 1.4296.

 

 

Sterling slid to a three-month low against the Dollar after the Confederation of British Industry’s retail gauge fell to minus 2 in June from 18 in May, the weakest in a year. Stores expect demand to be flat in July. The Pound sell-off began yesterday after the Bank of England raised the prospect of offering more stimulus and additional quantitative easing than previously thought, which is in contrast to what the US Fed announced yesterday regarding monetary policy in the US. Pressuring the pound was a broadly stronger dollar, which rose after the FOMC meeting. GBPUSD dropped to 1.5954, which is over 300 pips lower than yesterday’s high of 1.6261.

 

The Swiss Franc gained against a broadly weaker Euro, making 167 pips as EURCHF plunged from the open of 1.2035 down to 1.1875. After steadily rising yesterday, USDCHF was a little choppy today as traders initiated a big sell-off to book profits, those that were long. The pair closed down at 0.8398 versus a 0.8417 open.

 

Against the Yen, the Euro extended losses, edging down from a high of 115.09 down to 114.23. The Single Currency looks set to remain weak until European finance chiefs will decide on July 3 whether Greece has met conditions for its next aid payment. Meanwhile the Yen was weaker against an appreciating Dollar, which was stronger across the board after the FOMC meeting yesterday. USDJPY hit the highest level in a week, peaking at 80.78 from lows of 80.36.

 

EURUSD GBPUSD EURCHF USDCHF USDJPY
OPEN

(07:00 GMT)

1.4296 1.6030 1.2035 0.8417 80.36
DAY’S HIGH 1.4312 1.6066 1.2042 0.8435 80.78
DAY’S LOW 1.4152 1.5954 1.1875 0.8384 80.36
CLOSE

(14:00 GMT)

1.4169 1.5975 1.1900 0.8398 80.72

Note: Daylight Saving Time in effect for GMT