Forex Market Review – Euro steady, focus on Greece

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Euro edged slightly higher against a broadly stronger dollar on Greek politics optimism. Greek conservative leader Antonis Samaras helped lift sentiment by saying that a coalition deal could be reached soon and that the democratic left party proposal for a national unity government is close to the conservative party position. EURUSD rose to a European session high of 1.2955, moving off a 3-1/2 half low of 1.2904. EURGBP rose to 0.8042, off the 3-1/2 year low of 0.7995 reached early today.


Euro remains vulnerable until a Greek government is formed. Also weighing on the single currency is the situation on the Spanish banks, and markets are waiting to hear on any progress on reforms and how the Spanish government will help shore up these banks to prevent a collapse in the financial sector. Yesterday Spain announced it will part-nationalise Bankia, the country’s fourth largest bank, to prop up the financial sector.


The pound fell against the dollar after some mixed UK data, but was mainly weighed by a stronger dollar. Safe haven flows to the greenback increased after disappointing China data today raised fears over growth outlook and dampened risk appetite. GBPUSD fell to a session low of 1.6088, down 0.5 percent from the Thursday high.


USDJPY was little changed from Thursday levels after the pair surged in reaction to a drop in US jobless claims. Dollar reached highs of 79.98 yen in European trading today. EURJPY opened in Europe at 103.15 and rose to 103.57.


USDCAD rose steadily since the Asian session, to reach a European session high of 1.0053. All eyes are on the upcoming Canadian employment data. Forecasts are not good, and disappointing numbers could further weaken the loonie.