Forex Review – Euro back above $1.32; aussie extends decline

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The euro bounced back against the dollar in the U.S. session to make up for earlier losses and basically moved  back closer to  levels reached after its bounce on Monday. EURUSD bounced off a low of 1.3171 to rise above 1.3214.

The dollar’s earlier advance ran out of steam by the North American trading session. The greenback shrugged off U.S. economic data, on weak housing starts, and also showed little reaction to a talk that Federal Reserve Chairman Ben Bernanke gave today.

GBPUSD  mostly traded sideways in the last two sessions, supported above 1.5829. Sterling remained supported from a further decline after CPI data earlier today showed UK inflation eased less than expected in February, lowering the chances of further monetary easing in coming months.  The focus turns to Wednesday’s budget plan to be released by UK Chancellor of the Exchequer George Osborne.

The Australian dollar weakened sharply against the dollar, as higher-yielding currencies weakened across the board amid risk aversion due to concerns over slowing growth in China. Earlier today, the world’s largest mining company, BHP Billiton commented that steel production is slowing, and iron ore demand is slowing. China is a major export destination for Australia and so is sensitive to the health of the Chinese economy. AUDUSD slid to a low of 1.0456, which was 180 pips lower than the Monday high.

The Canadian dollar fell as much as 1 percent against its U.S. counterpart due to declining oil prices. Crude is Canada’s largest export.  Crude prices fell as much as 2.5 percent to US$105.06 a barrel, compared to Monday’s high of $108.22 . USDCAD spiked as high as 0.9967 in early North American trading hours, bouncing off low of  0.9859.

USDJPY was little changed over the day, remaining close to an eleven-month high. After a dip to 83.31, the pair bounced back close to previous levels, reaching 83.76. EURJPY hovered close to a five-month high, trading up to 110.75 .