The Euro traded close to yesterday’s 16-month high against the US Dollar today in European trading, supported by a broadly weaker greenback. The Dollar is at a three year low based on expectations that the US Federal Reserve will not tighten monetary policy in the near future. EURUSD hit a session high of 1.4876 gaining over 37 pips from the opening level of 1.4812. During European trading, the pair remained on high levels, trading in a tight range and testing the 1.4880 support level. Meanwhile, the Single Currency recovered losses from yesterday against the Sterling, to hit a new 6-month high of 0.8935, some 30 pips above the open level.
The Pound was up against the US Dollar, with GBPUSD gaining 30 pips to hit 1.6689 although not as high as the 16-month high set on Thursday but still higher than the previous April 21 high. Cable remained on high ground after GBP was given a boost on Thursday due to positive UK data that showed GDP improved in the first quarter, meaning the British economy is growing. Meanwhile, the Sterling was down against the Swiss Franc, due to some good news from Switzerland which boosted the Swiss currency. From the morning high of 1.4549, GBPCHF dropped some140 pips to 1.4409.
The Swiss Franc was lifted today to a record high after the important KOF economic indicator was released higher than expected at 2.29, versus the forecast 2.20. Prior month’s figure was at 2.24. Even after Swiss National Bank Chairman Phillip Hildebrand gave his upbeat speech, the Franc started to rise. He mentioned that inflationary risks are beginning to rise due to surging oil prices as well as other commodities. He added that despite the strong Swiss currency, which makes exports expensive, the domestic economy appears to be expanding more than expected. After release of the news, the Swiss Franc gained 7 pips against the greenback. USDCHF dropped from 0.8675 at news time down to 0.8668 in 5 minutes. The pair continued downwards to as low as 0.8643 to hit a record low. The Swissy is supported by a broadly weaker US Dollar which is at a three year low against a basket of currencies, based in the US Fed keeping monetary policy loose. Meanwhile, EURCHF also dropped since the news, from 1.2897 at news time (0930GMT) down to 1.2859.
USD JPY continued the downtrend in European trading, opening at 81.56 and dropping to a low of 81.11. EURJPY also trekked down from the open at 121.05 to 120.62. Today was a Bank holiday in Japan so there was no significant volatility. The BOJ is currently examining the economic downside risk caused by last month’s devastating earthquake after yesterday’s interest rates policy meeting where the rates were announced steady at 0.1%.