Forex USA – Euro extends gains; dollar drops to record low against yen

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EURUSD rose 2.7 percent in total today and hit a two-month high of 1.4246 in the US session as investors in markets across the world reacted positively to details of the EU debt deal announced after the EU Summit early on Thursday, which entailed leveraging the eurozone rescue fund to 1 trillion euros, a 50 per cent haircut on Greek debt for private bond-holders and recapitalisation of the region’s banks.

 

GBPUSD hit a seven-week high of 1.6140 in New York on continued risk appetite after a successful conclusion of the EU Summit with satisfactory agreements made on Greek bond haircuts and EFSF expansion. EURGBP also peaked at a seven-week high of 0.8829, gaining 1.6 percent on the day.

 

The Canadian dollar strengthened against its U.S. counterpart as the risk rally intensified after European leaders and banks reached a debt deal and crisis plan. Crude oil prices rose sharply, which is Canada’s major export. The Canadian dollar gained, USDCAD decreased by 1.4 percent since the EU summit closed, touching a low of 0.9895 by the end of the US session today.

 

USDJPY touched a fresh all time low yet again today, following a series of record lows since last week. The dollar plunged to 75.65 in the New York trading session, marking a 0.8 percent decline today. EURJPY opened New York at 106.38 and rose to a seven-week high hitting 108.12 as the euro strengthened across the board today.

 

The Swiss franc gained against most of its rivals today as it is still considered a safe haven and an alternative to the dollar, which weakened across the board today. USDCHF fell to a seven-week low in the US session, touching 0.8567 versus the session open of 0.8733. Since yesterday the weakening dollar has dropped 3.2 percent against the Swiss franc. EURCHF fell from 1.2254 to 1.2179. Some skeptics think it is premature to declare the euro crisis as fully resolved.

 

Gold rose in the US session to a five-week high of $1,749.88 as it benefitted from a weak US dollar. The two assets have an inverse relationship since gold is priced in dollars. The dollar which is also a safe haven is losing value so the alternative safe haven is gold, and investors switch to the precious metal to safeguard their investments in case of problems in Europe, as some are sceptical on the EU debt deal.