Forex Review – Euro struggles, oil hits 10-mth high

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The euro touched one-week lows against the dollar in a choppy trading  session during New York hours, pressured after weak U.S. manufacturing data dampened market sentiment and caused concerns that  the U.S. recovery may not be as strong. The  ISM (Institute of Supply Management)  U.S. factory index fell to 52.4 in February from 54.1 in the prior month. Consumer spending numbers were also weak.  EURUSD fell to 1.3281 and never broke higher than 1.3336.


What kept the euro from falling further was news that the ISDA (International Swaps and Derivatives Association) panel said the restructuring of Greek government bonds won’t trigger a CDS (payouts credit default swaps), basically meaning that Greece has not defaulted.


Sterling remained firm against the dollar, trading close to three month highs, and was barely affected by weaker-than-expected UK manufacturing data earlier today. What buoyed the pound was the unlikelihood of further quantitative easing and hopes that the British economy would escape recession supported the pound, as signalled by Bank of England governor Mervyn King.  GBPUSD hit a U.S. session high of 1.5973.


The dollar was little changed against the yen, remaining close to a nine-month high touched on Monday as the Japanese currency remains under pressure after Bank of Japan easing measures.  USDJPY traded the day in a range of 80.88-81.38.


Crude oil hit a ten-month high of $110.53, surging from the New York open price of $107.26. Oil was already up early in the day due to data from China showing expansion of manufacturing . But late in the U.S. session, price spiked further in the last hour of floor trading due to supply disruption concerns after reports of a fire in a Saudi pipeline and other news that Israel had announced a missile test which could worsen tension with Iran.


The Canadian dollar remained supported by higher oil prices since Canada is a major crude oil exporter. USDCAD hovered at five-month lows of 0.9840.