The euro fell to a three week low against the dollar after a disappointing Spanish bond auction shifted concerns back to the euro zone debt crisis. Bond yields rose while demand for Spanish debt weakened. Meanwhile, the European Central Bank kept its benchmark interest rate on hold at 1 percent as ECB President Mario Draghi said in a press conference he still sees downside risks and it was too early to consider winding down ECB’s accommodative policy. EURUSD fell to a low of 1.3106 during U.S. session, falling since a European session high of 1.3211.
The pound gained against the euro and clawed back losses against the dollar ahead of the Bank of England meeting on Thursday. Sterling is being buoyed by a series of strong PMI data this week, on manufacturing, construction and today, better than expected service sector PMI data were released. EURGBP fell to a two-month low of 0.8260 versus the European session high of 0.8312. GBPUSD bounced from 1.5832 to 1.5893, back to European session open levels.
USDCHF rose for a fourth straight session to hit a two-and-a-half week high of 0.9181, from the post-Fed minutes of 0.9021 late Tuesday.
Yen was stronger against the dollar today, reflecting safe haven flows as risk aversion picked up on Spanish debt concerns. USDJPY was off the Tuesday high of 82.98, hit after the Federal Reserve minutes, reaching a high of 82.67 in New York trading today.
The Canadian dollar weakened further against the greenback ahead of a jobs report tomorrow that is forecast to show Canadian job growth is slowing. USDCAD rose to 0.9972 in North American trading hours from 0.9912 in European trading.
Gold fell due to a stronger U.S. dollar following Fed minutes which indicate QE3 is unlikely. Gold and the dollar usually have an inverse price relationship because the precious metal is priced in USD. Spot gold fell to$1,611.65 in New York trading losing over $30 on the day.