EURUSD resumed its decline after a brief retracement in Asian trading, as risk aversion continues to dominate markets today. Negative news kept sentiment down. Firstly, Chinese growth data disappointed, as the world’s second largest economy slows down. Also German economic sentiment declined according to the ZEW survey. And finally, France is at risk of being downgraded by Moody’s. All this added to an already bruised euro that was beaten down yesterday after Germany dismissed any hopes of a quick resolution to the eurozone debt crisis. EURUSD fell to as session low of 1.3656 from an early high of 1.3779. Euro briefly pared gains against the dollar after better than expected PPI data from the US boosted sentiment and risk currencies briefly.
GBPUSD fell sharply after UK inflation data. Despite a rise in CPI, investors were convinced that the Bank of England was going to remain relaxed on monetary policy for a while and this would put pressure on the pound. Also, and overall risk-off market today due to weak China growth data also weakened sterling. GBPUSD fell from the London open of 1.5806 to 1.5694. EURGBP fell on a broadly weak euro that was hurt since yesterday after Germany downplayed hopes that a plan may be put in place at the EU summit this weekend.
USDCHF moved upwards as the safe haven dollar benefitted from a risk-off market today, peaking at a high of 0.9034 from 0.8964.
EURJPY extended its decline from yesterday as euro was sold off across the board after investors turned away from risk since yesterday when they were given a reality-check by Germany that Europe’s debt crisis cannot be resolved in a short time and the crisis plan cannot be done by the EU summit this weekend. EURJPY fell to 104.76 from an early European session high of 105.90. USDJPY broke out of range to dip to 76.61 as risk aversion pushed investors to buy the safe haven yen. But the dollar bounced back up to 76.82 after better than expected PPI production data from the US helped lift sentiment.
The Canadians dollar remained weak against its US counterpart as the the commodity price-sensitive CAD continues to suffer from a risk averse market. Also crude oil prices, which are Canada’s main export, edged down today weighing on the loonie. USDCAD rose to a session high of 1.0262 but soon fell to 1.0218 as CAD regained all losses following positive data from its main trading partner, the U.S.
The Australian dollar extended its fall against the US dollar early in to the European trading session, as risk-off sentiment affected high-yielding currencies like the aussie. Slowing growth in Australia’s main trading partner, China, weighed down the AUDUSD which fell to as low as 1.0117.