The euro hit a two month high against the dollar just as the European session opened peaking at 1.4549 as markets were still upbeat after Bernanke speech on Friday, giving investors some risk appetite. EURUSD soon eased back down to a session low of 1.4485 following German CPI data which showed that inflation in Germany slowed in August. Also there is concern that Greece’s bailout package is in danger of being derailed after Finland demanded collateral in return for agreeing to the second Greek aid package and could destabilize the euro. EURUSD rebounded just before the close of the session after positive U.S. personal spending data which boosted investor sentiment.
GBPUSD opened the session at 1.6388 and was mostly trading flat due to light volumes as a result of markets being closed for the U.K. bank holiday Monday. Towards the end of the session, cable was lifted to a high of 1.6206 following upbeat U.S. economic data showing personal spending in the U.S. had risen in July, so investors sentiment was lifted since it is evidence that things may not be as bad in the U.S. economy.
The Swiss franc weakened against the euro and the U.S. dollar to continue its downtrend from Friday when the leading Swiss KOF indicator showed the franc strength is beginning to harm the Swiss economy. Also as risk appetite was still on following Bernanke’s speech before the weekend, there was less demand for a safe haven asset like the Swiss currency. USDCHF opened the European session at 0.8079 and hit a high of 0.8160. EURCHF opened at 1.1747 and peaked at 1.1862.
USDJPY opened Europe at 76.65 after a flat Asian session, thought he pair moved down to a low of 76.56 after yen got a boost following what the markets saw as good news that Japanese Finance Minister Yoshihido Noda was elected as the next Prime Minister. Noda is famous for being a proponent of higher taxes to help Japan deal with its enormous debt burden, and is also known for numerous warning of intervention in the currency markets to control yen strength. USDJPY soon rebounded to higher than when it started to peak at 76.72 following better than expected U.S. personal spending data which shows investors that the U.S. economy is not as stagnant as was thought to be.