The Euro ended its four-day winning streak against the greenback stopping at a high of 1.4344 reached in the European session on Friday. From there EURUSD tumbled over 200 pips to bottom at 1.4138 in the US session. What accelerated the decline was the release of credit rating Agency Fitch downgrading Greece by three notches. In addition to investors dropping the Euro, a spur of sovereign selling pushed the Single Currency further down. Meanwhile, Spanish regional elections scheduled for this weekend, on May 22nd added to concerns, as Spain is also going through its own debt issues. There is speculation that Spain’s socialist government may lose the elections to the centre-right opposition Popular Party, which could unearth further financial problems.
Sterling ended the trading week at the highest point of the week hitting 1.6303 against the Dollar. The Pound extended gains from Thursday’s strong UK retail sales data. Cable did not succeed to break past the key resistance level on the technical side. On the fundamental side, the Pound’s gain was limited due to investors pessimism that UK interest rates will not be raised in the near future. Meanwhile, many believe that the surge in retail sales was only due to the Easter holiday sales and is not a good reflection of the struggling UK economy.
The Canadian Dollar slid against the greenback after unexpectedly weak retail sales as well as disappointing CPI data suggested that current inflation levels do not provide the Bank of Canada enough reason to raise interest rates in the near future. By the US trading session, USDCAD jumped from a low of 0.9640 up to as high as 0.9770 at one point. The Loonie soon regained some strength, lifted by a jump in oil prices, with the pair dropping to 0.9694. Crude oil had plummeted earlier in the day to touch lows of $95.91 but jumped up to $99.87 just before the close of the trading week. The Canadian dollar is a commodity linked currency, meaning it usually mirrors commodity prices.
The Swiss Franc held strong against the US Dollar, extending gain in the US session. USCHF dropped from 0.8854 down over 100 pips to 0.8746. The Swiss Franc is traditionally known to be a safe haven investment so demand picks up in times of uncertain in the global financial markets. With the recent debt crisis in Greece and other peripheral Eurozone economies, and the weakening of the Euro, many investors are turning to the Swissy.
Gold has been on the rise since May 17, making the biggest gain of the week this Friday, peaking at $1,515.58. During the US session it had touched a low of $,1486.63 but soon rebounded on safe haven buying as investors began to get frustrated over European debt, and Greece’s downgrade by Fitch rating agency added more to their concerns.