European Session – Euro rallies sharply against dollar to above $1.31
April 16, 2013 1:22 pm
The European Session on Tuesday was more active and upbeat, seeing a turnaround in sentiment compared to Monday’s gloomy market which saw risk currencies fall sharply.
This led to a strong surprise rally in the euro against the dollar, despite weaker than expected German ZEW data. The German sentiment index for economic expectations fell in April for the first time in five months.
Yesterday’s dismal China GDP data which dominated the market sentiment and weighed on euro, has faded away today and markets chose to react positively to a Spanish debt auction. The sale of 12-month and 6-month Spanish treasury bills totalled at 5.07 billion Euros, slightly higher than a maximum target of 5.07 billion Euros.
Meanwhile, investors expect euro to be supported by a weaker dollar as the Federal Reserve appears keen to continue with QE (quantitative easing).
EURUSD opened in Europe at $1.3074, and after a brief early dip to $1.3027, the pair rallied 0.8 percent to as high as $1.3140 going into the US session.
Much of the rally was due to a broadly weakening dollar whose decline was accelerated after Federal Reserve FOMC member Bill Dudley comments. Dudley said he favours continuing quantitative easing, based on the recent weak US labour market number. Of course QE has a weakening effect on the dollar.
Dollar fell to a 1-1/2 low against the Swiss franc on Dudley’s comments. USDCHF dropped to 0.9249 from 0.9325.
The yen’s recent bounce ran out of steam today. In the past two days the Japanese currency had gained due to demand for safe have assets. However the yen’s rise was unsustainable since the fundamental picture still remains supportive of a weaker yen going forward as the Bank of Japan implements tougher monetary easing to fight deflation in Japan.
Yen fell against the euro and dollar. USDJPY rose to 97.99, moving further from yesterday’s low of 95.78 EURJPY climbed to a high of 128.49 compared to yesterday’s low of 124.87 yen.
The European Session on Tuesday was more active and upbeat, seeing a turnaround in sentiment compared to Monday’s gloomy market which saw risk currencies fall sharply.
This led to a strong surprise rally in the euro against the dollar, despite weaker than expected German ZEW data. The German sentiment index for economic expectations fell in April for the first time in five months.
Yesterday’s dismal China GDP data which dominated the market sentiment and weighed on euro, has faded away today and markets chose to react positively to a Spanish debt auction. The sale of 12-month and 6-month Spanish treasury bills totalled at 5.07 billion Euros, slightly higher than a maximum target of 5.07 billion Euros.
Meanwhile, investors expect euro to be supported by a weaker dollar as the Federal Reserve appears keen to continue with QE (quantitative easing).
EURUSD opened in Europe at $1.3074, and after a brief early dip to $1.3027, the pair rallied 0.8 percent to as high as $1.3140 going into the US session.
Much of the rally was due to a broadly weakening dollar whose decline was accelerated after Federal Reserve FOMC member Bill Dudley comments. Dudley said he favours continuing quantitative easing, based on the recent weak US labour market number. Of course QE has a weakening effect on the dollar.
Dollar fell to a 1-1/2 low against the Swiss franc on Dudley’s comments. USDCHF dropped to 0.9249 from 0.9325.
The yen’s recent bounce ran out of steam today. In the past two days the Japanese currency had gained due to demand for safe have assets.
However the yen’s rise was unsustainable since the fundamental picture still remains supportive of a weaker yen going forward as the Bank of Japan implements tougher monetary easing to fight deflation in Japan.
Yen fell against the euro and dollar. USDJPY rose to 97.99, moving further from yesterday’s low of 95.78 EURJPY climbed to a high of 128.49 compared to yesterday’s low of 124.87 yen.
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