The euro held above the $1.32 level throughout the US trading session, making up for losses made earlier in the day when EURUSD eased off a 12-day high after the euphoria of the Greek bailout deal faded and many investors booked profits. The pair has been mostly trading within a range of 1.3266 and 1.3197.
US markets are playing catch up today after being closed on Monday for the President’s day holiday, and North American investors are beginning to digest the news of the approval of the 130 billion euro rescue package for Greece, that was signed off by euro zone finance ministers in Brussels in the early hours of Tuesday morning. U.S. stocks gained and bonds fell, indicating the deal made investors feel more confident shifting to riskier from safer assets.
The immediate relief rally was on the short-term positive fact that Greece has avoided defaulting on bond-redemption payments due on March 20. However, the euro has been unable to break above the key threshold of $1.33, as investors realized there are still a number of unknowns and areas of ongoing concern and are unwilling to push the euro higher. Investors are concerned about how Greece would implement the harsh austerity measures that they have been pressured to agree on in order to be approved for additional aid from its European partners and the International Monetary Fund.
Meanwhile, euro zone consumer confidence data released this afternoon showed an increase for the second consecutive month in February as Europeans showed signs of increased spending after last year’s collapse in morale. The positive data helped buoy the euro. The focus turns to euro zone provisional purchasing managers surveys on manufacturing and services activity on Wednesday. Improved data will be positive for the euro.
The euro hit a fresh three-month high against the yen in European trading, and peaked close to that high in New York trading, reaching 105.77. The yen hovered near multimonth lows against most other major currencies as last week’s surprise easing by the Bank of Japan prompted speculators to step up selling of the yen. USDJPY hovered near a six-month high, range bound around 79.61 – 79.79.
Sterling dipped lower against the dollar in US trading, touching lows of 1.5771. Earlier in the day GBPUSD hit highs of 1.5864.
The Canadian dollar traded weaker against its US counterpart after Canadian retail sales data disappointed markets by falling more than expected in December. USDCAD reached highs of 0.9973.