The Euro made significant gains in the European trading session today, erasing earlier losses against most major counterparts. Much of the reason is due to a pullback in risk aversion after another quake in Japan yesterday prompted the Japanese government to upgrade the risk level of its nuclear crisis. Additionally, the Euro was given a boost today after China pledged to support troubled Spanish banks. Chinese Prime Minister Wen Jiabao said to Spanish Prime Minster Jose Luis Zapatero that China is willing to make positive efforts to assist in the funding and restructuring of Spanish banks by continuing to purchase local sovereign debt. EURUSD pared losses from Monday and surpassed Friday’s high, hitting 1.4500. This is the highest level since October 2010. Meanwhile EURGBP hit an intraday high of 0.8901 gaining over 70 pips since opening the trading session. EURJPY gained 125 pips in the European session to peak at 122.12.
The UK CPI index was released this morning, giving a reading of 0.3%, much lower than the predicted 0.6%, versus the previous 0.7%. Annually, the rate was also lower than forecast, reading at 4.0% compared to the previous 4.4%.This indicates the first fall in inflation since July last year, giving the Bank of England more reassurance that inflation is under control in the British economy. The Bank of England kept interest rates unchanged in its decision last Friday, and will most likely hold the record low rate of 0.5% for the time being. GBPUSD plunged 77 pips within a minute upon release of the news from 1.6316 down to 1.6239. Meanwhile, EURGBP spiked 40 pips from 0.8843 0.8884 during news time.
The Sterling ended the session against the Dollar at the same level it opened. Following the announcement of weak Consumer Price Index at 0.3% as opposed to the 0.6% the market expected a near 90 pip loss was observed by the Sterling from which it has fully recovered as it reached 1.6314 and is currently traded at 1.6310. Highly important Unemployment Rates and Claimant Count Change figures are to be announced tomorrow in UK which are expected to generate significant volatility.
The US Dollar against the Swiss Franc continued to record losses without any signs of recovery. Since the session’s 0.9049 opening the pair has been on a steep downward movement constantly recording new session lows . Important Producer and Import Prices that will show an indication of consumer price inflation are to be announced tomorrow. The USDCHF pair is currently traded at 0.8951.
The US Dollar recorded gains during today’s EU Session against the YEN. The Dollar was making gains until the point it recorded the first peak high of 84.42 and since then has been following a sluggish downwards movement. The Japanese Yen made a lot of gains during the Asian Session following another earthquake, tsunami warnings and reporting of airport closure which would mean more funds would enter Japan some of which capped during this session. The USDJPY is currently traded at 84.137.
