The Euro made significant losses against the greenback in the later part of the US Session after the release of the minutes of the Federal Reserve’s April Policy meeting. EURUSD dropped from an earlier high of 1.4277 and spiking briefly to 1.4282, down to 1.4211. The meeting focused on the prospects of normalizing the current monetary policy at some point, suggesting a rise in interest rates later in the year. This gave a much needed boost to the greenback which has been waning in the past few days due to concerns of the US debt ceiling being reached. Despite the Dollar strength, Euro is still expected to remain above the critical $1.40 support level.
The Pound struggled against the Dollar to hit a six-week low. Cable opened the European session at 1.6271 and continued to decline to the US session down to 1.6104. What contributed to the Sterling’s decline was the disappointing UK employment report and a dovish Bank of England minutes. The Monetary Policy Committee’s votes remain unchanged from the previous 6-3 majority. Recently, economic data have been painting a gloomy picture of the British economy. Unemployment data today showed the biggest jump in over a year.
The Canadian Dollar erased losses from the earlier session. USDCAD reached a high of 0.9758 in the New York session, eventually dropping lower to 0.9700. The Loonie is very sensitive to the pulse of commodities, having a strong correlation with them, especially with oil. Crude oil rose again today from the open of 98.25 to peak at 100.96, buoyed by renewed concerns for the Eurozone debt crisis.
The Swiss franc traded mostly flat against the greenback, with the USDCHF pair not breaking below 0.8782. USD reached a high of 0.8843 but dropped down over 60 pips as demand for the safe haven Swissy picked up amid the concerns of the European debt crisis.
Gold has been rising since yesterday’s low of $1,471.63 to steadily rise to $1,499.83 in the US session, making the biggest gain on over a week. The nagging problems in Europe’s peripheral economies, notably the Greek debt, has prompted investors to rush to demand the precious metal again, realizing that world economic growth may not be in the picture yet.