Forex Daily Review US Session – EURUSD reaches new four day high after Trichet’s speech

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The Euro has been steadily rising since the beginning of the year and was close to hitting a four-month high against the U.S. Dollar, reacting to ECB Chairman’s speech. Since Trichet’s scheduled speech at 14:00 GMT, the EURUSD pair gained 36 pips within 20 minutes to touch 1.4163. Much of the boost to the Single Currency was given by the ECB’s hint that an interest hike in the short term was still highly likely despite Japan’s nuclear crisis and the debt problems of Greece, Portugal and Ireland. However, concerns were eased as the European Summit is due later this week and EU leaders are expected to agree on a debt package including measures to deal with the debt-ridden peripheral countries. The ESM (European Stability Mechanism) plan calls for a 500 billion Euro rescue mechanism to be launched in 2013, which will use paid-in callable capital instead of guarantees, and would offer better interest rates than the current European Financial Stability Facility (EFSF). EURUSD reached a U.S. session high of 1.4199, the highest since November 5th 2010. The pair subsequently corrected and is currently trading at 1.4208.

The Sterling has been steadily appreciating throughout today’s United States session against the Dollar, climbing from an open of 1.6266 to reach a 2 week high of 1.6326 in late session. The session gains follow on from earlier session gains and see the Sterling appreciating by over 100 pips on the day. The latest figures show the Sterling consolidating around the 1.6310 level as we approach the end of the US session. Inflationary data, scheduled to be released later in the week, has seen a hawkish anticipation and as a result has enabled the British Pound to gain against a USD today. Should the inflationary data come out with a hawkish outlook, some investors expect to see the GBPUSD pear convincingly break past the 1.6300 level and head towards the one year high of 1.6343 that was recorded last month.

The US session sees the Canadian Dollar pare back on some of the previous session’s gains as the USDCAD pair appreciates from a session open of 0.9765 to gain some 30+ pips and reach a session high of 0.9799. The Canadian Dollar is thought to have been boosted in earlier sessions due to firmer commodity prices and recent developments in Libya, which have in the past weeks, saw the correlated Oil prices rise as supply from Libya was limited. The recent airstrikes by the UN, following its announcement of a no fly zone over Libya, the Oil prices rose which in turn saw a rise in the Canadian Dollar.

The Swiss Franc continued to hold strong today, not far from its seven year high, as the currency remains a safe haven investment amid turmoil in Libya and ever since the earthquake in Japan. The USDCHF pair remained in range during the U.S. trading session since hitting an all-time low of 0.8921 on March 16th. It is currently trading at 0.9049. The U.S. Dollar dragged the pair down after news were released today reporting February U.S. home sales declining for the month of February, down 9.6% from a previous 3.4% rise.

Demand for the precious metal was spurred by investors seeking refuge in the safe haven investment during times of geopolitical uncertainty. News over the weekend reported an intervention in Libya by the U.S. and its allies implementing air attacks on Colonel Gadhafi’s loyal forces. As tension intensified in the region, gold prices firmed up, bolstered by the nuclear disaster in Japan. Despite progress of avoiding a nuclear meltdown in Japan, markets were only slightly calmed as uncertainty remains over the long-term impact to one of the world’s largest economies and how soon it can recover from the catastrophe. Gold has been consistently rising in the last four months, climbing almost 480 pips since March 16th to touch $1434.63 an ounce for the Spot rate. Gold futures for April delivery closed at $1,426.40, up 0.7% an ounce.