Forex USA Session – Euro rebounds from 7-week low, boosted by German Chancellor Merkel

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The Euro was made gains against the greenback in the US session after being a boost by German Chancellor Angela Merkel’s comments. She said that any restructuring of debt before 2013 in any of the 17-nations using the Euro would damage credibility of the Eurozone. She urged EU finance ministers to show support for Greece to avert debt restructuring. Meanwhile, an emergency loan program was approved for Portugal covering 3 years and 78 billion Euros. These measures eased debt concerns and the initial impact of the arrest of IMF Chief Strauss-Kahn wore off to lift the single Currency from its 7-week low against the Dollar, aided by sovereign demand, mainly from Asian central banks, still keen to buy on dips. After last week’s huge sell-off there is a lot of bargain hunting at the moment but the market remains cautious. EURUSD opened New York trading at 1.4109 and edged up 137 pips to hit as high as 1.4243.

The overall trend this month for the Sterling against the Dollar has been downward with a few retracements in between, based on a gloomy outlook for the British economy based on weak economic data and an unlikely rate hike in the near future. However, today the Pound stabilized hovering above the 1.6162 support line. In the US session it managed to gain over 80 pips from 1.6171 to 1.6159 buoyed by a weaker Dollar which was dragged down after news that the US debt level reached the legal limit today and the US Treasury will begin dipping into pension funds.

Canada’s dollar jumped against the U.S. currency after the open of the US session, again aided by a weaker greenback. USDCAD dropped some 80 pips from a high of 0.9749 down to 0.9689. By intra-session trading, the Loonie lost ground to mirror the drop in oil prices. Overall the trend since last week has been a declining Loonie following sell offs in commodities. The currency has a tight correlation with commodity prices, especially with oil and gold. Crude oil dropped from a session high of $99.63 to $96.88.

The Swiss franc made sharp gains against the greenback from early on in the European session, extending gains all through to the US session. The Swissy was buoyed by a weak Dollar which was weighed down by the US debt and worries about the US fiscal position. USDCHF fell over 1 percent over the two sessions today. It opened the US session at 0.8880 and dipped to a low of 0.8798.

Gold prices traded mostly in a range since the start of the trading week in the Asian session but remained well above the low reached last Friday. Three hours into the US session, gold was mostly flat, trading within a tight range. It got a slight break around 10am CET to jump up to a session high of $1,504.33. It soon lost all gains to come down to previous levels, hovering above the $1490 support level.