EURUSD opened the session at 1.4411 and hit an early high of 1.4452. Traders cited Middle East buyers. Euro soon fell to 1.4352 as dollar strengthened in anticipation of U.S. inflation data. Despite CPI rising higher than expected, and U.S. jobless claims jumping higher, dollar held firm due to investors turning to the U.S. reserve currency as a safe haven versus the euro. Market sentiment was also dampened as global stocks fell as renewed unease about a sluggish economic recovery prompted investors to cut exposure to riskier assets like the euro.
Sterling fell against the dollar after after disappointing U.K. retails sales data. Sales volumes barely grew in July, to 0.2 percent below forecast of 0.3 percent signalling a still sluggish British economy as consumer spending declines. GBPUSD spiked down to 1.6502 from the pre-news high of 1.6533 but rebounded to 1.6530. EURGBP retreated to a session low of 0.8692 from a post-UK retail sales data high of 0.8742.
The Swiss franc weakened against the dollar and the euro going in to the European session on speculation the Swiss National Bank will eventually take further steps to stem the currency’s strength. Investors realize that the bank cannot continue to make empty threats and will eventually act on its proposals or risk losing credibility with market players. Yesterday the franc gained after the bank fell short of imposing a target rate against the euro and disappointed investors. Today USDCHF reached an early high of 0.7980 after gaining over 80 pips since the Asian open and consolidated at those levels. EURCHF hit a high of 1.1455 before easing to 1.1388.
EURJPY opened Europe at 110.71 but fell to 109.92on concerns of global slowdown as world equity markets fell and also lingering fears of a European financial tax plan will slowdown growth. Franco-German summit on Tuesday disappointed markets by rejecting a joint euro bond issuance and instead decided on a financial tax. USDJPY opened at 76.63 and traded between 76.66 and 76.54.