Euro gained 0.5 percent against the dollar in the European session as Italian 10-year bond yields fell by over 6 basis points and Spanish yields dropped by almost 3 basis points. There was an absence of key level 1 events on the economic calendar so any moves in the euro were mainly due to corporate buying and any headlines from Europe. There was market talk that there was a large buy order by a large bank on behalf of Middle-East buyers which helped lift EURUSD to the upper 1.25’s.
Also, a news report said that the EU will consider easing the terms of the Greek bailout agreement. This is positive for the euro. Meanwhile euro zone Industrial production fell less than expected, down 0.8 percent versus the 1.2 forecast. EURUSD opened the session at 1.2489 and hit a high of 1.2552. Euro remains vulnerable ahead of the Greek elections on Sunday.
GBPUSD opened the session at 1.5549 and hit a high of 1.5597 before retreating. Sterling fell against euro as the single currency gained ground against most majors. EURGBP gained 0.3 percent to a high of 0.8059 as short positions were squeezed by corporate buying.
The Swiss franc gained against the dollar during the session though gains are expected to be capped ahead of tomorrow’s Swiss National Bank Monetary policy assessment. USDCHF fell to 0.9566 from an early high of 0.9618.
USDJPY has been range trading in the past two days, capped below 79.70. However, US retail sales data due later today could cause a larger move in the dollar. EURJPY rose in the European return but found resistance just below the key 100.00 level. Bank of Japan policy meeting on Friday remains in focus as there is speculation that more easing will weaken yen.
USDCAD headed back lower to 1.0247 as the Canadian dollar has been supported by higher crude oil prices since yesterday. Oil is a major Canadian export.