Forex Review – Euro rises for second day on Greek PSI optimism

Important: This page is part of archived content and may be outdated.

The euro rose for the second day against the dollar as optimism increased that Greece will complete a debt-swap deal. The euro maintained the early gains all through the North American session on reports that more than 75 percent of private creditors have agreed to participate in the PSI bond swap deal. Greece’s debt-restructuring plan will set the ball rolling for the second bailout package which will prevent a disorderly default to occur.

Meanwhile, adding to upbeat sentiment was the positive tone of comments from European Central Bank President Mario Draghi after the central bank kept the key interest rate at 1.0 percent.  EURUSD rose to a high of 1.3290 versus a Wednesday low of 1.3095.

Risk appetite pushed the dollar lower as demand for safe haven fell. The ICE dollar index which measures the dollar against a basket of six currencies, fell to 79.090, compared to 79.692 late on Wednesday.

Sterling rose against the dollar after the Bank of England left its lending rate at a record low and made no changes to its quantitative-easing program. GBPUSD rose to 1.5832, up from 1.5696 on Wednesday.

Yen weakened against the dollar and euro after Japan posted a record current-account deficit of 437.3 billion yen   in January. That’s the biggest shortfall since comparable data began in 1985. USDJPY rose to a day high of 81.72 while EURJPY peaked at 108.45, the highest level since the end of February.

The Canadian dollar rallied against its US counterpart for the second straight day, after the Bank of Canada kept its interest rate at 1 percent gave a hawkish report. USDCAD fell to 0.9891 from a session high of 0.9960.

Looking ahead, the focus turns to results of the Greek bond-swap deal, which will be announced on Friday, as will employment data from Canada and the U.S.