The Euro hit a one-month high against a broadly weak US Dollar. Firstly the Euro was buoyed by the good news that Greece will receive its next aid payment and avoid restructuring its debt. Also, the conclusion of the troika mission to put in place the second bailout plan helped lift the Euro. Meanwhile the Dollar was weakened after poor non-farm payroll data which suggested the U.S. economy is on a longer road to recovery than expected. EURUSD climbed to a new month high of 1.4641, gaining 153 pips from the U.S. session open price of 1.4488.
Sterling dropped to a four-week low against the Euro in the U.S session, pushed down by the stronger Single Currency which was lifted by a wave of optimism on a Greek debt solution. Interest rate differentials also lifted the Euro against the Pound, as the EU will likely raise interest rates before the UK, as there is more evidence of slow UK economic recovery. EURGBP edged up to highs of 0.8992 from session low of 0.8867. Against the greenback, the Pound pared losses against a weak dollar after data showed U.S. jobs growth slowed sharply in May, reinforcing the view that the world’s largest economy is stuck in a soft patch. GBPUSD rose to highs of 1.6437 from lows of 1.6290 in US trading hours.
The greenback tumbled to a new all-time low against the safe-haven Swiss Franc. After news that U.S. non-farm payrolls only rose by 54,000 in May and unemployment rate was up to 9.1%, risk aversion caused investors to demand the safer Swissy, as the Dollar is now vulnerable to depreciating further if US growth slumps in the long-term. USDCHF plunged to the lowest level on record to 0.8334 from the US session open at 0.8412.
The Canadian dollar recovered losses made when the US jobs report caused it to drop against the greenback. The Loonie is a commodity-linked currency, so the weak employment report and a weaker US economy leads to a drop in oil prices, and consequently a drop in the Canadian Dollar. However, a later report that Canada’s Conservative government will focus on jobs and growth while eliminating the federal budget deficit, helped lift the Canadian currency again. The government also mentioned it aims to balance the budget by 2014 without raising taxes. USDCAD had reached a high of 0.9850 after the US non-farm payroll data, but then fell to 0.9751 as the Loonie recovered on the good news from the Canadian government’s new mandate.
Gold surged to a two-day high almost close to the month-high reached on June 1st. After the disappointing U.S. jobs report weakened the greenback, spot gold jumped over $21 to $1,546.68 from $1,524.83 a troy ounce. Investors turn to gold as a safe haven during political and economic insecurity and inflationary pressure. It typically has an inverse relationship with the U.S. Dollar and moves in the opposite direction to the dollar. Gold last hit a record high of $1,575.78 on May 2. If uncertainty over the U.S. and overall global economic health is heightened, that high may be breached again soon.