Forex Market Review – Sterling falls to six-week low against broadly stronger dollar

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Euro was stable against the dollar during the European trading session, though hovering near  three-week lows. The single currency is pressured by a broadly stronger dollar which has gained partly as a safe haven asset during a risk averse environment this morning following a large trade deficit by China. Also contributing to dollar strength was Friday’s stronger-than-expected February non-farm payroll report, which has quelled market speculation that the Fed could resort to a third round of bond-buying to stimulate the U.S. economy.


EURUSD bounced off the three-week low  of 1.3077 to climb to a session high of 1.3134. The pair will likely remain trading sideways, being supported by Friday’s Greek debt restructuring of about 200 billion euros worth of debt, paving the way for a second Greek bailout.


Sterling fell to a six-week low against the firmer dollar, after breaking below strong support level. GBPUSD broke 1.5660 and fell to 1.5606, its lowest since January 25, to trade with losses of around 0.3 percent for the day.


The Australian dollar was weighed down by weak sentiment after China reported a wider trade deficit and disturbingly weak export numbers over the weekend. Slower growth in the world’s second largest economy  will hurt commodity-linked currencies like the aussie, whose key export market is China. Recent weak Australian GDP and employment data add to the bearish outlook on the aussie. AUDUSD opened in Europe at 1.0538 and declined to a session low of 1.0480.


USDJPY is being supported above 82.10. Profit-taking led the pair lower today but dollar strength is expected to keep strong ahead of the U.S. Fed meeting this Thursday. While the Fed is not expected to reverse policy just yet, markets will look to see if Bernanke signals that he will retain the ultra low interest rates until 2014, as stated in a previous policy statement.