Forex U.S Review – Canadian Dollar hits two-week high against USD

Important: This page is part of archived content and may be outdated.

The Euro extended gains to reach a new week high versus the U.S. Dollar. Optimistic economic data from a major powerhouse, China, led to increased risk appetite, thereby investors prefer the Euro over the traditional Dollar investment. The Single Currency’s rise does not mean to say that markets have forgotten about lingering Greek debt issues. It’s just that there has been no major news events regarding Greece today, and that has kept the Euro buoyed for now but not for long, depending on the outcome of the Brussels Summit on June 24. EURUSD climbed to 1.4496.

Sterling settled in a range after rising to its highest level of the week in the prior session, supported at 1.6375 against the Dollar. The Pound was lifted after data showed inflation rose 4.5 percent year-on-year in May which is significantly higher than the Bank of England’s 2 percent target. However the market’s optimism in the Pound will prove to be short- lived since analysts believe the Bank of England will still not respond by a rate hike any time soon. In fact, just before the U.S. session close, GBPUSD did turn downwards.

The Swiss franc until today was in great demand as a safe haven investment against Greek debt issues and slowing U.S growth. However, data today showed US retail sales did not fall as much as expected and PPI data rose to 0.2 percent. While not the greatest numbers, at least there is some evidence of growth in the U.S. economy as was interpreted by the investors when they bought up the Dollar to boost USDCHF to highs of 0.8454 from pre-news level of 0.8386.

The Canadian dollar advanced to its highest level in two weeks against the U.S. dollar following optimistic economic data from both sides of the border. Canadian industrial capacity utilization rose in the first quarter as manufacturers showed renewed strength after a year of slowing growth, while U.S. retail sales fell less than expected in May, and producer prices rose more than expected. The loonie gained over 80 pips when USDCAD fell to 0.9674.

Gold rose by $10 in New York trading, to rise to a high of $1,525.93, boosted by inflation pressures in China. Data released today indicated that inflation accelerated at its fastest pace in almost three years. Since China is the world’s second-largest economy, investors want to hedge against inflation by investing in the precious metal. Meanwhile, gold is also being supported by lingering Europe debt woes and will probably remain buoyed until the end of June when Greece is scheduled to get its next loan.

Note: Daylight Savings Time in Effect for GMT