EURUSD declined to a one week low in the US session as the euro was under pressure dampened market sentiment due to euro debt concerns prompted investors to sell off risk and protect their investments in the safer liquid dollar in order to wrap up the month-end and 3rd quarter- end. EURUSD hit a session low at 1.3382 tumbling from the open of 1.3498. Just today euro lost over 280 pips against the dollar, marking its worst quarter end since mid-2010. Investors have little faith in European leadership and begin to doubt and successful solution to the debt crisis and fear a Greek default is looming close.
The British pound’s performance was not representative of the market as it reached a three week high against euro. Market talk suggested that this was due to a large UK clearer selling a large amount of euros (almost 4 billion) related to the “UK’s annual rebate from European Union agricultural subsidies”. EURGBP tumbled to a US session low of 0.8578 from an early Europe high of 0.8697. GBPUSD rose to 1.5661 but soon pared gains to fall to 1.5579. Sterling is expected to come under further pressure as speculation grow that next week’s Bank of England policy meeting could result in launching further quantitative easing which consequently weakens the currency.
The Canadian dollar weakened against its U.S. counterpart to touch a one year low as USDCAD soared to a high of 1.0465 in New York trading. Risk aversion pushed investors to take refuge in the liquidity of the U.S. dollar which was in demand due to month-end and quarter-end rebalancing flows. Falling equities, commodities and rising volatility today affect the risk-sensitive Canadian currency. Canada’s main export is crude oil which plunged by over US$4 today falling below US$79. Canadian economic data today which showed the economy grew for the second straight month was ignored toady as the main focus was on Europe and its debt crisis affecting global growth.
USDJPY opened the US session at 76.82 and managed to hit a high of 77.18. Weak market appetite for risk pushed investors to the safety of the US dollar today, the alternative safe haven to the yen because investors are fearful of letting the Japanese currency gain to much strength in case of BoJ intervention. Japanese finance minister Azumi announced today the expansion of the FX intervention fund by 15 trillion yen and that the BoJ will continue to monitor the currency markets in case yen strengthens to dangerous levels. However against other crosses, yen managed to gain slightly.
USDCHF rose from the US session open of 0.9012 to a high of 0.9083. Similar to the yen, the Swiss franc is also under watch by the SNB which is controlling franc strength after the September 6 intervention by pegging the franc to the euro. So the dollar is the safe haven alternative to the franc.