European Session
Euro rattled by German official's comments, USDJPY hits new month low
Monday 4th June 2011
The Euro hit a fresh one-month high against the U.S. Dollar just as European markets began trading, hitting 1.4657. However, the Single Currency was soon rattled by some negative news and rocked off its highs to drop 67 pips down to a session low of 1.4592. A spokesman for the German finance ministry said it was not certain there would be a second Greek bailout programme. However, investors believe that the Euro will remain supported by expectations of a rate hike by July. The focus is now on the ECB meeting on Thursday to see if any signals will be given or hawkish comments. If there is a rate hike, the interest rate differential between the E.U. and U.S. will help buoy the Euro against the greenback.
Sterling moved down from its early morning highs of 1.6441 to inch down to 1.6382 against the U.S. Dollar after the International monetary fund mentioned in its annual report to the UK economy that the government should maintain its current course and not adjust its macroeconomic policies. The IMF said that the weakness in economic growth and rise in inflation over the last several months was unexpected and temporary. This signals clearly to the markets that the UK will not be raining interest rates anytime soon. Meanwhile, EURGBP remains close to the four-week high, trading within a range of 0.8922 and 0.8896. Both currencies were volatile today as the Euro was rocky after the German official's comments and the Pound was dragged down on expectations of no interest rate change.
The Swiss franc lost its hold against the U.S. Dollar, and the greenback eased off its all time lows reached after disappointing U.S. jobs data on Friday pushed cautious investors into the safe-haven currency. By the start of the European session, USDCHF climbed up 45 pips from 0.8340 to 0.8385, as profit-takers allowed the pair to pull-back. The Euro was struggling to rise against the Franc, aided initial by the optimistic news of Portugal's election results which ended months of political uncertainty in the debt ridden country. Also the fact that Greece will be receiving its next aid tranche buoyed the Single Currency but gains were checked as some uncertainty came back after the German official's comments that it's too early to rejoice since the second bailout deal has not been put in place yet.
The U.S. Dollar hit a one-month low against the Japanese Yen in the European session, as concerns on the health of the U.S. economy grow after the Dollar Index dipped as low as 73.643, a trough not seen since May 5, after the closely watched non-farm payrolls report last Friday showed a sharp slowdown in job creation, pushing the unemployment rate up to 9.1 percent from 9.0 percent. USDJPY pair inched down from the open of 80.30 to 79.97. The Yen is generally seen as a safer currency versus the greenback.
All posts are as always only my opinion.
Home office:
