Forex US Review – Euro rebounds on glimmer of new optimism

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The Euro rebounded to hit session highs as it gained positive momentum after comments by the chief of the European Financial Stability Facility (EFSF) Klaus Regling, that the fund’s guarantees will be raised to 780 billion Euros from 440 billion. There was also optimism the Greek parliament will pass the austerity plan and Greece’s Prime minister George Papandreou will win a parliamentary vote of confidence in the new cabinet on Tuesday. EURUSD rebounded to 1.4326 from lows of 1.4211.

 

Sterling extended gains against the US Dollar well into the US session, up almost 125 pips to 1.6233 since the morning European session. This was due to investors recovering after concerns that Euro zone finance ministers had decided to postpone an agreement on the next tranche of emergency loans to Greece. Meanwhile, UK economic data due on Tuesday on Net public sector borrowing are widely expected to add to the gloom over the UK budget deficit, which could drag down the Pound again.

 

The Swiss franc rose against the Dollar as a delay by euro zone finance ministers on a final decision over emergency loans for Greece bolstered safe haven demand. USDCHF dropped to a four day low of 0.8405. The pair soon rebounded as the market realized it overreacted this morning to news, and meanwhile optimistic comments by EU officials changed market sentiment again.

 

The Canadian Dollar gained against the greenback in US trading with USDCAD dropping to 0.9780. Falling crude oil prices had put pressure on the Canadian dollar earlier in the session, and it fell as low as USD91.13 then rebounded to USD93.47. The Loonie is a commodity linked currency and so is affected by moves in oil prices. Lack of any US or Canadian economic data and fundamentals could not affect either currency so the focus was more on external events, mostly from Europe.

 

Gold climbed to highs of $1,546.83 from $1,532.73 in the US session supported by euro zone debt woes after ministers delayed a decision on emergency loans to Greece. The precious metal then settled around$ 1,541.28 and may remain there as investors await the U.S. Fed’s Open Market Committee’s announcement on interest rates on June 22, which could squeeze the Dollar, and push gold higher. The Fed is expected to hold interest rates near zero for an extended period amid evidence that the U.S. recovery has lost momentum.

 

EURUSD USDJPY GBPUSD USDCHF USDCAD GOLD
OPEN

(12:00 GMT)

1.4232 80.29 1.6169 0.8466 0.9829 1537.48
DAY’S HIGH 1.4326 80.32 1.6233 0.8473 0.9848 1546.83
DAY’S LOW 1.4211 80.08 1.6158 0.8405 0.9780 1532.73
CLOSE

(21:00 GMT)

1.4298 80.29 1.6199 0.8463 0.9799 1539.18

Note: Daylight Savings Time in Effect for GMT