Forex US Review – Euro extends gains, Canadian Dollar weaker after data

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The Euro edged up slightly against the Dollar after reaching a low of 1.4494, lifted mainly by investors buying on dips, to a high of 1.4548. The US session had light trading since US markets are closed for the 4th of July Independence Day holiday. In the prior European session, the Euro was hurt by ratings agency Standard and Poor’s warning that a rollover of Greek debt would be considered “selective default” under their ratings criteria. However, the Single Currency is underpinned by strong expectations of an ECB rate hike this Thursday.

 

 

Sterling’s decline against the Dollar stopped at 1.6053 before rebounding to 1.6099 as risk appetite picked up. However, the Pound’s gains are capped as investors are still cautious about the recovery of the British economy. Meanwhile, against the Euro, Sterling will probably remain weaker due to the interest rate differentials if the ECB raises interest rates this week. The BoE will unlikely raise rates until next year. EURGBP rose to a US session high of 0.9043 from 0.9012. UK Services PMI due out tomorrow could cause Sterling fluctuations.

 

 

The Swiss Franc remains weaker, pushed down by lower demand for the safe haven currency as concerns of a Greek default eased. EURCHF traded close the six-week high reached in the earlier European session at 1.2344. USDCHF hovered around the two-week high, with no significant volatility due to light Dollar trading because of the U.S. holiday.

 

 

The Canadian Dollar trading was very flat in the US session due to the American Independence Day holiday. The loonie usually takes its direction from the greenback since the US is its major trading partner. Weak Canadian manufacturing data that was released today did drag down the domestic currency, with USDCAD rising to a session high of 0.9616 after the news, from a low of 0.9589. The RBC Canadian Manufacturing Purchasing Managers’ Index dropped for a third month, raising concerns about the country’s recovery.

 

 

Gold trading was flat in the session, hovering around the previous high of $1,496.43 and off the six-week low from Friday, lifted by buying on dips. Gains are expected to be capped since demand for the safe haven asset has weakened for now while risk appetite is still up on easing concerns of a Greek default. Physical gold demand is also low since summer is a low season. Investors are waiting for any significant news especially on the Greek debt issue that could shift gold prices.

 

 

EURUSD USDJPY GBPUSD USDCHF USDCAD GOLD
OPEN

(12:00 GMT)

1.4518 80.67 1.6103 0.8490 0.9591 1495.53
DAY’S HIGH 1.4548 80.84 1.6099 0.8502 0.9616 1495.73
DAY’S LOW 1.4494 80.66 1.6104 0.8470 0.9589 1492.93
CLOSE

(21:00 GMT)

1.4533 80.78 1.6079 0.8479 0.9607 1496.18

Daylight Savings time in effect for GMT