The Euro consolidated against the dollar in the U.S. session after having surged over 200 pips in the morning following better than forecast Euro zone retail sales data as well as rising final Services PMI data. EURUSD was boosted to 1.4342 on the news and traded just below that resistance level in the New York session and above 1.4257. The euro remained supported by a weaker dollar that was hurt by poor U.S. service sector data.
Sterling extended gains against the dollar to rise to 1.6428, gaining 166 pips since the European session open. The Pound was boosted today by better than expected Services PMI data which indicated that activity in the dominant U.K. service sector grew at its fastest pace in four months. This burst of good news helped market sentiment after yesterday’s weak construction data.
USDJPY moved downwards since the open of Asian trading and extended its fall for three straight sessions. The pair opened New York at 77.08 and fell to a low of 76.76. Despite warnings from the Bank of Japan to curb yen’s rise and signalling a possible market intervention, the yen still regained strength against a faltering dollar, that was knocked down this afternoon following disappointing economic data on services sector growth. Fears of the U.S. falling into a double dip recession are mounting after a series of poor data weaken investor confidence in the country’s economic recovery.
The Canadian Dollar fell to a three week low against the U.S. Dollar after U.S. data showed growth in the services sector slowed down in July as well as factory orders. Weak U.S. data affects the loonie since the United States is Canada’s major trading partner, and consequently sluggish U.S. growth also affects growth in Canada, and would make it less likely for the Bank of Canada to raise rates until 2012. The Canadian Dollar was also weighed down by falling commodity prices, especially crude oil which Canada exports. USDCAD rose to a session high of 0.9644 from the New York open of 0.9586.
The Swiss franc only briefly remained off record highs against the dollar and soon rebounded in the U.S. session as weak U.S. data on services growth and factory orders raised concerns of a sluggish U.S. recovery. Earlier in the day, the SNB cut interest rates in an attempt to curb the Swiss currency’s appreciation but during times of crisis like now it is a difficult mission since the franc is considered a safe haven asset. USDCHF fell to 0.7633 from the earlier session high of 0.7786. The Swiss franc also regained against the euro. EURCHF fell to 1.0896 from an earlier high of 1.1146 as Euro zone debt concerns dragged the euro down
Gold remained around the record high of $1,672.82 an ounce reached in the earlier session and traded sideways for most of the U.S session before dipping to $1,656.57. Investors turned to gold as the only safe haven asset after some weak economic data released today denoting slow growth in the U.S. and raised concerns of another recession.