EURUSD initially rose in the US session after a sharp fall in the prior session as investors were concerned that Greece may not be able to secure more European bailout funds, raising the possibility that it may default on its debt, and were nervous after rumours circled of a 50 percent haircut. The downgrade of eight Greek banks did not help matters. Euro remained buoyed and steadied off for the rest of the session on market talk that the European Central Bank is considering stimulus measures to cope with the region’s sovereign debt crisis helped boost sentiment, though investors remained cautious and would rather not take large positions ahead of the weekend. EURUSD hit a session high of 1.3544.
GBPUSD was on an uptrend in the US session bouncing of 1.5382 to peak at 1.5487, moving further off a one year low. Sterling was sold off heavily yesterday which led the pound to a record low against the yen as concerns about the global slowdown and a deepening euro zone debt crisis triggered a wave of selling of riskier assets, including the pound, for the perceived safety of the dollar. Gains are expected to be limited as sterling remains pressured by increasing speculation that the Bank of England could resort to more quantitative easing to stimulate the struggling UK economy.
USDCAD has been range bound since yesterday as risk sentiment reigns in the markets and commodity-linked currencies like the Canadian dollar suffered one of their worst declines. Oil tumbled to a six month low. Oil is Canada’s main export. USDCAD opened at the high of the range at 1.0329 and drifted down to 1.0223 before bouncing again.
The euro rose against the yen as global equities erased losses and the European Central Bank governing council members said the central bank may step up efforts to ease market tensions. EURJPY was lifted to 103.71, made easier by light volumes due to Tokyo markets closed for a national holiday and the fear of BOJ threat of currency intervention still exists. USDJPY was rangebound due to thin trading.
Gold tumbled by $120 today as its safe haven status is in question lately. The precious metal has been treated as other commodities, which have been battered in the past couple of days and investors have ignored bullion’s safe-haven appeal that had made it a safe harbour in times of trouble. Dollar strength pressured gold. The two usually have an inverse relationship. Spot gold fell as low as $1,648 in New York.