Forex Market Review – Euro gains for second day

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The euro gained for a second day against the dollar and yen as the IMF proposed to expand its lending capacity by as much as $500 billion to create a lending fund of $1 trillion, in order to protect the global economy amid the euro zone debt crisis.

Also negotiations have resumed between Greece and its creditors today. This also had a little bit of a calming influence on the euro today. Investors are hoping that Greece can make progress toward a deal with private creditors to take a big haircut on their debt.

EURUSD rose to a high of 1.2862 in New York trading hours. The pair made a gain of 1 percent on the day from the Asian session open this morning of 1.2734.

The upbeat market sentiment weakened the dollar against most risk crosses. The ICE dollar index, a measure of the USD value compared with six currencies, slipped to 80.570 from 81.175 late Tuesday in North American trade.

The dollar traded at 76.87 yen at its highest point in the North American session , little changed from 76.84 late Tuesday.

The British pound rose to $1.5439 from $1.5326.

The Canadian dollar strengthened against its US counterpart after the Bank of Canada released its quarterly monetary policy report. The BOC said that strong domestic household spending will offset the negative impact of Europe’s debt crisis on Canada’s economy. USDCAD fell to 1.0109 from a session high of 1.0176.