EURUSD opened the U.S. session at the lowest point of the day at 1.4354 weighed down by weak GDP data from Germany and euro zone before heading up in anticipation of a positive outcome of the Merkel-Sarkozy meeting. However, euro soon slipped after the meeting failed to satisfy markets. They were hoping to see a more dramatic announcement to support the euro markets and they did not receive that, especially with no agreement on a eurobond and failure to expand the 440 billion-euro rescue fund. Instead France and Germany proposed a financial transaction tax. EURUSD slipped from a high of 1.4472 to 1.4377.
The British Pound performed well today against the dollar after a report showed U.K. inflation accelerated more than forecast last month, reducing the likelihood that the Bank of England will introduce further quantitative easing as conditions are not right for injecting further monetary stimulus into the economy. GBPUSD rose to a session high of 1.6475 from an open of 1.6376.
The Swiss franc erased gains against the dollar and euro made in early European trading after U.S. industrial production data showed an increased by 0.9 percent in July, more than forecast and by the most this year. This improved market sentiment and shifter investors away from the safe haven franc and back to the dollar. USDCHF rose to a session high of 0.7949 from a low of 0.7771.
USDJPY rose after U.S. industrial output data beat expectations. Also, the news coincided with an announcement from Fitch Ratings agency which kept the U.S. rating at AAA with a stable outlook. USDJPY hit a high of 76.92 but soon fell to 76.67 and consolidated into a range after investors were disappointed with the outcome of the Merkel – Sarkozy meeting and rejection of a Eurobond and proposal of a financial tax.
The Canadian dollar began the North American session by paring losses against its U.S. counterpart ahead of economic data from both sides of the border as well as on optimism ahead of the Franco-German summit. However, trading got choppy and volatile after everything disappointed, including the weak data on Canadian manufacturing and US housing starts as well as the Europe meeting undershooting expectations. Meanwhile, crude oil prices declined, weighing down the commodity-linked loonie. USDCAD opened at 0.9868 then fluctuated between 0.9802 and 0.9854.
Gold prices rose today as several economic data from both Europe and the United States disappointed today. Additionally, the outcome of the much anticipated Merkel-Sarkozy meeting failed to satisfy investors who were expecting a more drastic plan to help with the euro zone debt crisis. God is the ultimate hedge in times of uncertainty. Its price rose to a session high of $1,786.57.