EURUSD fluctuated during the session. After dropping early in the session to 1.4376, the pair rebounded to 1.4447 as the euro was lifted by a weaker dollar. Risk sentiment was mostly on during the day, pushing investors to riskier assets like euro and shifting away from the safe dollar. Investors are betting that U.S. Federal Reserve Chairman Ben Bernanke will hint on further stimulus measures to boost the U.S. economy during a central bank meeting on Friday in Jackson Hole, Wyoming. If there will be more quantitative easing, investors expect the dollar to fall further.
The safe-haven Swiss franc continued to remain weaker against the dollar and the euro in the U.S. session after data showed euro zone and German manufacturing growth improved. This resulted in some clawback in pessimism and that helped to reduce demand for safe haven assets like the Swissie. Also expectations of U.S. Fed stimulus talks on Friday to revive the U.S. economy lifted risk sentiment. EURCHF hovered around a 1.1431 high. USDCHF rose to 0.7918 from a low of 0.7870.
USDJPY opened the U.S. session at 76.57 to extend the downtrend from the European session but soon rebounded after reaching a low of 76.46, as buy orders were triggered and the pair climbed to 76.73 to make up for some of the losses. Investors are cautious of going long on yen due to warnings from the Bank of Japan that they will flood the economy with more yen to try to cheapen the Japanese currency.
The Canadian dollar made some gains against the U.S. dollar early in the session following a jump in Canadian retail sales data for a third straight month. However, the upbeat sentiment soon faded and the loonie weakened again as investors realized that a breakdown of the data revealed that the increase in the stats was due to a one-off rise in auto sales and not an overall increase in from other sectors. USDCAD traded flat after the data between 0.9866 and 0.9908.
Gold declined during all of the session after encouraging data on PMI manufacturing from Europe and China, which eased investor concerns and showed there is still some growth happening, although small. Spot gold fell from the session open of $1,884 to a low of $1,828.52.