Forex Review – Euro sinks as Greece scrambles to form new government

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The Euro sank to its lowest level in over three weeks against the US Dollar. Investors are getting jittery after euro zone finance ministers have yet to agree on involving private investors in the second financial rescue for Greece. Violent protests in Athens today against new austerity plans does not help matters. One of the conditions of the bailout plan is to pass through new austerity measures. Greek Prime Minister Papandreou announced he will form a new government tomorrow and ask for a vote of confidence. Investors preferred to take a defensive stance by getting out of risky trades, selling of Euros. EURUSD is on a continuous slide down reaching 1.4155 by the end of the U.S. session.


Sterling followed the euro and slid against the Dollar after jobs data showed the number of Britons claiming unemployment benefits rose in May. Tomorrow retail sales data are expected to be released lower than the previous month. A spate of poor economic data recently gives evidence that the UK economy is slowing down and the economic outlook is gloomy. The Bank of England is not likely to raise interest rates anytime soon. GBPUSD fell to 1.6167 from the open level of 1.6273.


The Swiss franc made losses against a soaring US Dollar today. USDCHF pair climbed to a two week high peaking at 0.8550. Swiss economic data showed that producer price inflation declined unexpectedly last month.Meanwhile, investors are holding off the Swiss until tomorrow’s announcement on interest rates by the Swiss National Bank. Rates are expected to remain unchanged.


The Canadian Dollar was pressured by the US Dollar after Canadian manufacturing sales numbers dropped 1.3 percent in April, reversing much of the previous month gains, blamed on the Japanese earthquake reducing supplies to the auto industry. Meanwhile Canada’s major trading partner also released data at the same time today which showed the U.S. economy is facing higher prices underlying inflation rose to its highest level in nearly three years in May. Also, crude oil prices plummeted to $94 a barrel today, weighing down the loonie which is a commodity-linked currency. USDCAD surged 140 pips to 0.9828 from 0.9689 in the U.S. trading session.


Gold gained almost $20 rising to highs of $1,534.28. The precious metal was boosted by safe-haven buying as equity markets pullback amid concerns on Greece’s debt crisis as well as uncertainly surrounding the US debt ceiling which has been reached. A group of top U.S. lawmakers set an ambitious July 1 goal to reach a deal to raise the $14.3 trillion debt limit so the world’s biggest economy can avoid default and keep borrowing.



(12:00 GMT)

1.4294 80.68 1.6259 0.8509 0.9689 1518.78
DAY’S HIGH 1.4316 81.05 1.6273 0.8480 0.9828 1534.28
DAY’S LOW 1.4155 80.58 1.6167 0.8550 0.9677 1513.88

(21:00 GMT)

1.4170 81.03 1.6174 0.8536 0.9787 1530.28

Note: Daylight Savings Time in Effect for GMT