EURUSD tumbled after the European Central Bank cut interest rates and its new president Mario Draghi warned Europe was heading into a mild recession before the end of the year. Euro then rebounded after news that Greece cancelled the referendum it was planning to hold on the bailout package. Investors were relieved to see one of the major uncertainties eliminated. EURUSD which had fallen to a US session low of 1.3853 bounced back up to 1.3853.
GBPUSD mirrored EURUSD movements and also see sawed to an early session high of 1.6039 then to a low of 1.5947 after the ECB rate cut then bounced back up to 1.6060 after the referendum cancellation.
The Canadian dollar gained against its US counterpart tracking gains in commodity prices particularly crude oil, which is Canada’s major export. After briefly weakening following the ECB rate cut, the loonie recovered very quickly to extend gains after risk appetite was firmed up when investors reacted positively to news that Greece has shelved referendum plans. Overall rising Canadian stocks markets boosted by advances in resource stocks helped market sentiment and lifted the Canadian dollar. USDCAD closed down at 1.0080.
The yen weakened against most major counterparts including the euro, dollar, pound and Australian dollar as risk appetite lessened desire for the safe haven Japanese currency. Euro gained 1.4 percent in US session. EURJPY opened in New York at 106.56 and advanced to a high of 108.05 after news of the Greek referendum cancellation. This means Greece will receive its next aid tranche from the IMF/EU before it runs out of money in December. The dollar slightly advanced against yen as risk appetite improved, with USDJPY moving up to 78.09 from the 78.00 open price.