The Euro was slightly lifter off its lows reached in the prior Asian session, to recover some of the losses made against the US Dollar overnight in Asia, changing direction to move up after opening at 1.4033. EURUSD gained 77 pips from lows of 1.4012 to highs of 1.4092. News in the morning that Finland approved Portugal’s bailout packaged help lift the Euro. Meanwhile, a report by Reuters said that German banks are on track to pass their stress tests due in June, based on the fact that two landesbanks recently changed their capital structure. The report gave some support to the Single Currency. Additionally, Asian central banks are buying Euro on dips which may temporarily buoy the Euro. However, Citibank said in a note that its investors have unwound long bets on the Euro in the past few weeks and suggested further selling. The direction of the Greek debt crisis is still unclear to investors who prefer to stay away from risk and are shorting rather than buying on dips. Just before the close of the European session, the Euro was given a big boost of over 20 pips from 1.4067 to as high as 1.4092 on negative news from the US on a decline in durable goods orders.
Sterling recorded a new two-month high against the weaker Euro. After being lifted to highs of 0.8706, EURGBP dropped 55 pips to a low of 0.8652, the pair’s lowest level since March 23rd. Meanwhile, sluggish UK growth figures were released today indicating that the British economy is still on a slow recovery as household spending declined significantly in the last quarter, the most in two years. The poor data will give little reason for the Bank of England to raise interest rates anytime soon. This data initially held down the Pound against the greenback until the afternoon at 13:30 London time when US Durable goods orders were announced, worse than expected, making the US Dollar drop. GBP got boosted by 42 pips from 1.6216 to1.6257
The Swiss Franc made significant gains in the European session against the US Dollar after having traded in a range in the previous Asian session. USDCHF made losses from the morning highs of 0.8813 down to 0.8736. Uncertainty in Europe increased demand of the Swiss currency which is traditionally known to be a safe haven investment. Meanwhile, the weak data from the US before the close of European trading led to the greenback dropping and giving the Swiss Franc even more strength. Against the Euro, the Swissy recorded a new high. EURCHF dropped from morning highs of 1.2369 down to 1.2296.
The Japanese Yen lost all gains made against the US Dollar form the previous Asian session when it profited from positive Japanese Trade Balance data released overnight. USDJPY rose in European trading from lows of 81.79 to highs of 82.15, although the pair dropped after the US report on durable goods orders, as this made the greenback drop against most majors.