Forex Europe Review – Euro falls after weak growth data, lifting Swiss franc and yen

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The euro fell versus the dollar after lower than expected German and euro zone growth data dented investor confidence and increased concerns about a slowdown amid a growing debt crisis in the 17 nation euro region. Market focus is now on the Franco-German summit at which President Nicolas Sarkozy and Chancellor Angela Merkel are expected to talk about how to tackle the debt crisis. EURUSD fell to a session low of 1.4354 from the 1.4408 open before rebounding close to the end of the session to 4.4391 after the dollar was weakened by lower than expected U.S housing starts data which showed construction stagnated.


The pound strengthened against the dollar and the euro after a report showed U.K. inflation accelerated more than forecast last month, reducing the likelihood that the Bank of England will introduce further quantitative easing as conditions are not right for injecting further monetary stimulus into the economy. GBPUSD rose to a session high of 1.6393 from an early low of 1.6321. EURGBP fell after the news from 0.8813 to 0.8765.


EURCHF continues to be unattractive to investors today as the euro extended its decline against the Swiss franc following German and euro zone growth data which showed GDP fell fir both. This dampened risk appetite and pushed investors to the safe haven Swissie again as concerns of a worsening EZ debt crisis are hard to shake off. The euro gave back all gains made yesterday when the franc weakened sharply after speculation that the Swiss National Bank would peg the Swiss currency to the euro. EURCHF fell from and early session high of 1.1304 down to 1.1162. USDCHF also fell after the GDP data to 0.7771 from 0.7847.


EURJPY fell after the weak GDP data from Germany and euro zone, bringing the pair down to a low of 110.09 from an early high of 110.75. USDJPY initially continued its range from the prior session but soon dipped from an open price of 76.86 to a low of 76.64. Investors preferred the safe haven status of the yen today though still cautious of BOJ warnings of an intervention to curb yen strength.


Spot gold was up today from the European open price of $1,766.42 hitting a high of $1,782.12 then consolidating. Risk appetite was dampened by weak GDP data from Germany and euro zone, which stoked concerns the region may be far from recovering its economic footing, consequently pushing investors to the safe haven investment.