The euro rose against the dollar due to upbeat sentiment after a successful Spanish bond auction and calmer nerves after assurances from Germany and France that they support Greece to stay in the euro zone, which somewhat quelled speculation that Athens may soon default on its debt. Positive euro zone economic data on inflation and employment change also helped buoy the euro. EURUSD climbed from the open of 1.3718 to 1.3824 before falling after better than expected US manufacturing sales and CPI data helped lift the dollar. Also Friday’s euro zone finance ministers meeting on the Greek sovereign debt crisis will cap any further euro gains.
Sterling moved further off its eight month low against the dollar and rose most of the session on the back of relief that UK retail sales only declined by 0.2 percent in August and there were no surprises. Also a quarterly BoE survey showed UK inflation expectations rose more than the previous one, which quells any hopes of the BoE expanding QE by its October 6 meeting and may have to wait later. Meanwhile EURGBP retreated to a low of 0.8708 after the UK retail sales data, after being helped to an intra-week high of 0.8739 by Greek debt “rollover” buzz.
The Swiss franc initially slipped after the SNB’s quarterly policy announcement, when it also held interest rates at zero percent and said it saw no imminent inflation risks. EURCHF climbed from the open of 1.2056 to 1.2091 until slightly after the rate announcement before easing off to 1.2048. The franc was also little changed against the dollar immediately after the rate announcement but soon strengthened as the dollar weakened ahead of US economic data. USDCHF opened at 0.8786 and fell to 0.8720 before bouncing post data to 0.8751.
USDJPY opened the European session at 76.55 and edged down to 76.93 before the dollar surged against the yen after data showed a higher-than-expected rise in U.S. consumer prices for August as well as better than expected manufacturing sales, which offset a disappointing increase in weekly jobless claims. Rising inflation data suggested that the Federal Reserve would likely be reluctant to embark on another round of quantitative easing too soon, which is seen as positive for the dollar.