The euro erased all gains against the dollar after data showed U.S. consumer sentiment worsened in early August. This wiped out risk appetite again which had briefly come back in the European session after a ban on short selling financial shares was imposed to improve consumer confidence and tempt investors back into the markets. Markets took a dive yesterday after concerns grew that French banks were in trouble. EURUSD fell from a high of 1.4289 down to a low of 1.4209 with a slight rebound to end up at 1.4257.
Sterling consolidated into a range against the dollar after jumping over 130 pips in the European session helped by strong UK construction output data also due to improving risk sentiment. GBPUSD touched a U.S. session high of 1.6253 and hovered above the low of 1.6311.
The Swiss franc extended losses against the dollar in the North American session. USDCHF opened at 0.7702 and rose to 0.7784. Investors are moving out of the safe haven Swissie due to realizing the currency was overvalued and the Swiss National Bank has threatened to intervene to stem its appreciation through various measures, one of which could include negative interest rates or pegging to the euro. The franc also weakened against the euro, lifting EURCHF from the open of 1.0933 to a high of 1.1092.
USDJPY rebounded from a low of 76.49 after having fallen in the previous European session weighed by a falling S&P 500 index and a drop in the Thomson Reuters/University of Michigan preliminary index of consumer sentiment index which dampened risk appetite and pushed investors back to the safe haven yen. However , Japanese Finance Minister Yoshihiko Noda repeated again today that he will consider various options if one-sided moves in the yen continue. This reminded traders not to push up yen too much and eased off, letting USDJPY rebound to 76.88.
The Canadian dollar saw some volatile trading in the session after disappointing U.S. consumer sentiment data knocked it a bit, it steadied and regained some ground. The U.S. is Canada’s major trading partner so any negative news south of the border will spill over to Canada and affect the loonie. USDCAD opened at 0.9876, rose to a high of 0.9917 then low of 0.9867 following the US data.
Gold prices fell today due to the rebound in stock markets, especially in Europe after a ban was imposed on short selling financial shares lifted investor confidence in investing again. Better than expected U.S. retail sales data helped divert money from gold. After hitting a new record high above $1,810 in Asian trading on Thursday, spot gold has been falling since then, to as low as $1,723.07 in New York trading today,with a slight rebound to end the week at $1,746.22.