Forex Market Review – Euro steady on Greek debt deal optimism; sterling falls ahead of BoE

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EURUSD pushed higher in early European trading after consolidating Tuesday’s gains, hitting a new 2 month high at 1.3287 from yesterday’s high of 1.3268. Optimism on a final deal being signed regarding a Greek bailout is buoying the single currency. However, strong resistance has kept gains capped below this morning’s high, resulting in a range.


Trade volumes are thin as most investors are waiting on the sidelines for the outcome of the Greek leaders meeting which is underway today to approve the deal with will then be finalized in a cabinet meeting later tonight.   A signing of the deal would save Greece from a default and thus would be positive for the euro. However this may be short-term since euro is still vulnerable to debt issue from Portugal and Spain, which could take the spotlight after Greece and send euro tumbling again.


Beyond that, the immediate focus will shift to interest rate decisions tomorrow from the European Central Bank and Bank of England. The ECB is not expected to deliver further easing at this meeting but the Bank of England is expected to expand quantitative easing by another 50 billion pounds. This is pressuring the pound which fell from a twelve week high of 1.5927 to 1.5868 during the session.


Commodity-price sensitive currencies like the Australia, New Zealand and Canadian dollars all gained today, rising against the US dollar. AUDUSD hit a near six-month of 1.0844, while the kiwi hit a five-month high. NZDUSD reached  0.8406. USDCAD fell to near the three-month low at 0.9934.


Euro trekked higher against the Swiss franc to reach 1.2126, the highest since January 18.