Forex USA Review – Dollar gains after US growth and jobs data

Important: This page is part of archived content and may be outdated.

EURUSD rallied in the US session and soon headed downwards as the euro was under pressure from a stronger dollar following better than expected US growth and jobs data. The euphoria from the German vote on expanding the European Financial Stability Facility (EFSF) earlier in the day soon faded and investors realized that the EFSF is not the ultimate solution to the euro zone debt crisis. Also not all 17 euro zone member states have ratified the bill yet, so there are more votes needed to actually put the new EFSF in effect. With the end of the month and end of quarter arriving tomorrow, traders are squaring off positions as they do not want to hold on to long euro positions amid uncertainty on Europe. Meanwhile investors are waiting on news from the EU and IMF inspectors who returned to Greece today to decide whether Athens has done enough to secure a new batch of aid vital to avoid bankruptcy. EURUSD fell to 1.3551 from a session high of 1.3663.

 

GBPUSD hit a one week high of 1.5711 in the US session after being boosted by news that the Swiss National Bank is looking to increase its weighting of sterling assets in a year’s time. However this optimism soon faded mid-way into the session and sterling pared all gains against the broadly stronger dollar to fall to 1.5576. Renewed concerns of the euro zone debt crisis dampened sentiment and the positive news form the US on GDP and jobs boosted the dollar against the pound.

 

The Canadian dollar weakened against its U.S. counterpart after briefly gaining early in the New York session on a relief rally over progress on the European debt crisis following the German vote on the EFSF. This proved short lived, and investors returned to the safety of the liquid U.S. dollar which was boosted by better than expected data on GDP and jobs. USDCAD rose to 1.0401, its highest in a year.

 

USDJPY trekked high since the news of the German vote on the European rescue fund which lifted market sentiment. The dollar was given an extra boost after positive US growth data. USDJPY hit a high of 77.01 from a previous session low of 76.43. Euro strengthened against yen most of the day today reaching a high of 104.91 yen but soon eased off down to 103.88 as investors realized bigger challenges loom for the euro zone now and the risk of a Greek default still exists.