Forex Market Review – Euro recovers losses to hover at $1.30

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The euro had a choppy day against the dollar, see-sawing from a three-week high  of 1.3061 in the European session before dipping to 1.2952 in New York trading, and then finally gaining back losses to climb back up to 1.3026. However, the euro is likely to remain vulnerable until further developments regarding the Greek debt swap deal.


Earlier in the day, euro was boosted by strong euro zone PMI data but the stalemate in the Greek debt talks soon outweighed the economic data as default fears pressured the single currency.


The British pound gained after data showing the UK budget deficit narrowed in December. GBPUSD rose to a four-week high of 1.5616 from the New York session open of 1.5560. UK Public Sector Net Borrowing was down to 13.7 billion pounds in December from 15.9 billion pounds in December 2010 and below forecasts for borrowing of £14.9 billion.  The focus turns to GDP data on Wednesday, which is expected to fall.


The yen slid against both the euro and the dollar, after the Bank of Japan cut its economic growth forecasts through fiscal 2012.    The euro hit a four-week high of 101.28. USDJPY surged by over 1 percent on the day to 77.84, a four-week high as well.


The Canadian dollar regained earlier losses against its US counterpart. After weakening sharply earlier in the day and following Canadian retail sales data, the loonie was able to bounce back in the North American trading session. Retail sales growth slowed in November, highlighting the risks to the economy, rising by 0.3 percent in November, compared with a revised 0.9 percent increase in October. USDCAD dipped in the session to 1.0084 from 1.0140.