Forex U.S. Review – Euro falls, gold rises on lingering debt concerns, loonie falls on weak inflation data

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The Euro slid against the Dollar since what came out of the Brussels summit on Thursday was not enough to convince investors in the long term that debt will be sustainable in Greece and not spread to the other debt ridden euro zone peripheral economies. However the Euro could remain supported due to uncertainty about the debt ceiling debate in the U.S. EURUSD fell to a session low of 1.4323 from the New York open of 1.4402.

 

Cable created a V-shaped chart in the US session, as Sterling slid off the five-week high in the first half of the session to a low of 1.6263 on profit taking then rose again to around the open level at 1.6309 lifted again by investors buying on the dip. Since the conclusion of the EU summit, the Pound was boosted on the resurgence of risk appetite but it remains volatile as a sluggish British economy may undermine the currency. The flash GDP data due next week are expected to be poor, which could weigh o the Pound.

 

USDJPY is on track for its third weekly loss, and continues to move toward its all time low struck in March at 76.35 after the devastating earthquake and tsunami in Japan. After a sharp fall in the Europe session, retraced and consolidated in New York hours. Two reasons for Yen gaining against the greenback: one is the optimism in market sentiment after the EU debt deal agreed on at the summit yesterday and the other reason is a weaker dollar bruised by the deadlock in US Congress over the debt ceiling. USDJPY traded at low of 78.27 and highs of 78.64.

 

The Canadian Dollar moved off its 3 ½ year high against the U.S. Dollar following weaker than expected inflation data released today. Canada’s inflation rate in June came in tamer, easing to 3.1 percent on a year on year basis, falling from an eight-year high of 3.7 percent. Following the CPI data, USDCAD rose to a high of 0.9516 from the US session open of 0.9469 then consolidated for the rest of the session.

 

Gold began to rise today since the start of the European session, rebounding from the Asian low of $1,586.84 to rise to $1,607.07 halfway through the U.S. session. As the Euro has begun falling since mid-way through the European trading session, this prompted investors to seek safety in the safe haven investment. Some have reservations about the bailout plan for Greece and doubt the EU summit debt plan will prevent debt contagion to the other euro zone economies.