EURUSD opened the European session at 1.4295 and remained in consolidation until a sudden jump to 1.4416 in thin trading due to large purchases by institutional buyers. Rumours that the European Central Bank was going to purchase Italian bonds also helped investor confidence to buy the euro. Until the sudden boost in euro, the currency was trading lower due to concerns of increased funding costs for European banks and renewed unease about a slow global economic recovery, prompting investors to cut exposure to riskier assets like the euro.
GBPUSD opened the session at 1.6460 and rose early to 1.6523 where it consolidated and held firm after a smaller than forecast budget deficit was announced today. The U.K. recorded a 20 million-pound deficit this year versus a 3.5 billion pound shortfall a year earlier. This was good news considering the British economy is going through a sluggish recovery. GBPUSD continued to rise to 1.6584 taking direction from the jump in the euro late in the session. Meanwhile, ERUGBP which had fallen to a session low of 0.8652, surged to 0.8702 by the end of the session on rumours that a large institution was buying up euro before the markets close for the weekend.
The Swiss franc gained against the dollar and the euro as investors sought a refuge in the safe haven currency amid plummeting stock markets which are extending yesterday’s losses . Market sentiment is damp as concerns of a slowing global economy are growing more after weak U.S. data were released yesterday and European banks may face liquidity issues due to higher funding costs. USDCHF opened the session at 0.7940 and fell to a low of 0.7855. EURCHF opened at 1.1351, fell to 1.1252 before rebounding to 1.1372 after being lifter by institutional buyers.
Yen initially gained against the euro as risk aversion pushed investors to the relatively safe haven yen, bringing EURUSD to a low of 109.00 from the open of 109.36. Euro was dumped on fears of debt contagion in the euro-zone and a global recession. However, the pair was lifted to 110.17 before the end of the European session as market chatter revealed that large buy orders from Russian institutional investors were triggered.