The Euro advanced against the Dollar for most of the U.S. session as there was less of an adverse view about the outcome of the EU leaders summit meeting on Thursday. Optimism was given to investors after Greek Finance Minister Evangelos Venizelos said an agreement is “attainable” at the summit. Also today, ECB Governing Council member Ewald Nowotny signaled policy makers may compromise on the use of Greek bonds as collateral. EURUSD opened the U.S. session at 1.4174, climbing to 1.4211 then fell sharply after U.S. President Obama’s speech to 1.4107. Dollar was boosted after Obama said in his speech that he supported a deficit-reduction plan proposed by the bipartisan “Group of Six” senators aimed at avoiding a U.S. default.
Sterling rose against the Dollar early in the session on the resurgence of risk appetite but fell after the release of U.S. housing starts. GBPUSD opened at 1.6115 and rose to a high of 1.6176 before falling to a low of 1.6105. U.S. President Obama’s speech also added strength to the U.S. Dollar as he endorsed a deficit cutting proposal.
The Swiss Franc which has been recently a safe haven investment during these times of financial turmoil, weakened against most of its major counterparts today. The Franc has moved away from its record levels against the Dollar. USDCHF rose from a session low of 0.8162 to a high of 0.8276. Risk appetite has picked up now with the market focusing on the Euro zone leaders summit on Thursday where they will try to reach an agreement on a second rescue package for Greece. Meanwhile, the Dollar was boosted as Obama gave a nod to a proposal put forth by a bipartisan senators group to reduce the deficit.
The Canadian dollar rose against its U.S. counterpart to its highest level in more than two months after the Bank of Canada held its key interest rate steady, but hinted more firmly than before that it would resume hiking rates soon as it forecasts that economic growth will speed up in the second half of this year after a second-quarter slump. USDCAD fell over 60 pips to a session low of 0.9481 from the open of 0.9551.
Gold prices fell off the record highs reached early in Europe, sliding to $1,582.33 from the U.S. session open of $1,603.98 after Obama’s speech boosted the Dollar. Gold and USD have an inverse relationship. A rise in U.S. housing starts in June and Obama giving some optimism in a debt reduction deal being reached, helped boost the Dollar and reduce risk aversion and investors moved away from the safe haven asset to seek other investments.
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