The Euro continued its slide over 150 pips against the Dollar down to 1.4301 after opening the European session at 1.4456. Despite strong expectations of an ECB rate hike tomorrow, the Common Currency was seriously bruised by Moody’s downgrade of Portugal to junk status yesterday. The fear of contagion to the rest of the debt-ridden peripherals caused investors to sell-off the Euro.
Sterling followed the direction of the Euro, sliding 73 pips against the Dollar down to a low of 1.5984 from the open of 1.6058 as risk aversion pushed investors to safer currencies, such as the Dollar which was preferred over the Pound. A gloomy outlook on the British economy proven by recent weak economic data and the BoE unlikely raising interest rates until next year has weighed down on the Pound. Against the Euro though, Sterling was stronger, with EURGBP falling to 0.8942 from the session open of 0.9000.
The safe haven Swiss Franc gained against the Euro with EURCHF dropping for three straight days down over 310 pips from Monday’s high of 1.2344 to a European session low today of 1.2024. General risk aversion caused investors to buy the safer Swiss currency, as debt issues from Europe to the U.S. to China are concerning investors. China raised interest rates today raising concern that a slowdown in the world powerhouse will cause headwinds in the global economy. USDCHF fell from a session high of 0.8442 to 0.8399.
USDJPY initially rose early in the European session, opening at 80.90 and hitting a high of 81.09. Risk aversion pushed up the Dollar against the riskier Japanese Yen, as markets were rattled by the Moody’s Portugal downgrade and China raising interest rates. The pair soon changed direction, heading down to 80.78 after data from the US showed job cuts rose in June to 5.3 percent compared to a previous fall in job cuts by 4.32 percent.
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