Euro recovered losses made against the dollar taking direction again today from headline news in the absence of core data. Comments by the European Commission president Jose Manuel Barroso raised optimism for the introduction of common euro bonds that could help contain the euro zone debt crisis. Also lifting the single currency was a joint statement from German and French leaders following a conference call expressing support for Greece and that it should stay in the European monetary union. Nerves were clamed after Greek Prime Minister Papandreou announced his government is committed to meet deficit-reduction targets demanded as a condition for an international bailout. Meanwhile the dollar was dragged down by weak US retail sales data today. EURUSD bounced off a session low of 1.3635 to hit a high of 1.3780.
Sterling ended the session up, paring some losses from early in the US session. Early in the day during the previous session, UK employment and earnings in the United Kingdom have helped give some bullish sentiment to the British pound. The Claimant Count Change report, which measures the change in the number of people filing for unemployment benefits in the previous month, fell well below market forecasts to give the pound a boost. Profit taking ensued and briefly brought down GBPUSD 1.5728, but it soon bounced to 1.5795.
The Canadian dollar fell early in the session for the first time in three days to within one cent of parity with its U.S. counterpart, as oil dropped on speculation a global slowdown will hamper demand for raw materials. Oil is Canada’s main export. The commodity-linked currency soon recovered losses when euro picked up later in the session as risk sentiment improved following a conference call with German, French and Greek leaders giving optimism tat the Greek crisis will be contained. This led USDCAD to fall from the session high of 0.9939 to 0.9881.
USDJPY was on a downtrend all day as overall risk aversion helped strengthened the safe haven yen. Dollar’s fall was accelerated following disappointing US retail sales data. USDJPY fell to a low of 76.59 from the session high of 76.83. Yen gained against the euro early in the session after China announced at the World Economic Forum that it will put conditions on support to Europe’s highly indebted economies. But euro soon rebounded after an optimistic conference call between Merkel, Sarkozy and Papandreou. EURJPY has been range bound all week, with resistance at 105.60 and support at 104.40.
Gold fell as market sentiment improved due to European policymakers offering plans to contain the region’s debt crisis, suggesting a common euro bond. This removed the precious metal’s safe-haven appeal. Spot gold fell to a low of $1,808.55 for the early New York session high of $1,836.00