The Euro slid to a one-week low against the Dollar a day after Moody’s downgraded Portugal to a junk credit rating, adding it to the list of Euro zone countries risking default. Fears of contagion to Ireland and Spain make investors nervous to hold on to Euro for the long-term. EURUSD reached a low of 1.4285 in the US session today compared to yesterday’s US session low of 1.4395. Markets are focused on Thursday’s ECB policy meeting, when a rate hike is expected. Meanwhile, the US ADP non-farm employment change will affect the USD.
Sterling extended losses against the US Dollar in New York trading hours, with GBPUSD falling to 1.5947 from the open price of 1.6010. Risk aversion in the markets usually pushes investors away from riskier currencies like Sterling, into safer ones like the Dollar. Meanwhile, the focus is on the Bank of England policy meeting tomorrow to see what the decision will be regarding interest rates. Speculators expect rates to remain unchanged until next year.
The Swiss Franc pushed higher versus the US Dollar and the Euro today, gaining from increased risk aversion in the markets as investors fear contagion after news of a Portugal downgrade by Moody’s and China raising interest rates. The Swiss Franc is in demand as an alternative safe haven currency in times of uncertainty. USDCHF fell from highs of 0.8435 to lows of 0.8363.
The Canadian Dollar has been weakening against the US Dollar since Friday. In the US session, USDCAD spiked up to a high of 0.9693 from the session open price of 0.9649. News today of China raising interest rates for the third time this year led to a sell-off of risk currencies and commodities like oil, which Canada produces. The loonie is a commodity-linked currency.
Gold rose to $1,533.53 from $1,509.88 in the US trading session. Gold has been on the rise since Friday as investor concerns over Eurozone debt and the slowdown of the Chinese economy as well as China raising rates today. Gold is safe haven investment and a hedge against rising inflation.