By Nikolas Xenofontos from easy-forex
EUR/USD
The Euro weakened at the start of the new week against the US Dollar due to heightened risk aversion in the market. World equities fell sharply as the cost of insuring Italian and Spanish debt climbed higher. The pair opened at 1.3086 and fell as low as 1.3032 following last Friday’s Non Farm Payrolls data from the US. NFP figures disappointed investors after it was revealed that the US economy added fewer than expected new jobs in March, raising fears about the global economic recovery. Expectations about a third round of quantitative easing by the Federal Reserve continue to dominate price action and focus now turns to announcements from US officials which may provide further signs about the Fed’s stimulus plans. US Fed Chairman Ben Bernanke spoke about the US economy saying that the economy has yet to fully recover and that financial institutions need to hold more capital to protect financial stability. The single currency remains under pressure as market players are concerned about the debt problems of the eurozone periphery countries such as Italy and Spain, which is pushing the Italian and Spanish government bond yields higher. Focus now turns to the eurozone Industrial Production and the US inflation data.
GBP/USD
The British Pound declined versus the US Dollar on Tuesday, weighed by a strong US Dollar. Bernanke said during his speech that the US economy has a long way to go until it fully recovers following last week’s poor NFP data. Investors are now worried about the global economic recovery, which is hurting the demand for riskier assets. Negative sentiment dominates the markets as world equities turned lower and Spanish bond yields came under pressure weighing on the Sterling. The pair opened at 1.5878 then rose to 1.5929 before it sharply dropped to 1.5808. Focus now turns to the UK Trade Balance expected later this week.
EUR/JPY
The single currency plummeted versus the Japanese Yen this week after the Bank of Japan interest rate decision. BoJ refrained from further policy easing and unanimously decided to keep its monetary policy unchanged. The Yen advanced following the decision but it remains fragile ahead of forecasts for the Japanese economy due on 27 April. The pair opened at 106.37 this week and slid to 105.96. The pair declined by 3.8% during the previous week.
EUR/GBP
The Euro edged higher against the British Pound on Tuesday rising as high as 0.8272 after opening at 0.8241 on Monday. Sterling appeared significantly weak today as risk aversion dominated the currency markets and investors’ demand for riskier assets fell. Eyes now turn to Spain and the Spanish bond yields while investors are still worried about the recession in the eurozone.
USD/CHF
The Greenback rebounded against the Swiss Franc during the previous week. On Monday, the pair opened at 0.9179 and is trading in a range between 0.9143 and 0.9208. The Swiss Franc strengthened last week following the higher than expected inflation data from Switzerland. The Swiss National Bank cited deflation as a reason to intervene and, given the latest positive figure, market tested and momentarily pierced though the 1.20 Euro Swiss Franc floor. The SNB set a floor at 1.20 last September for the Euro versus the Swiss Franc in order to protect its exports. No major economic data is expected this week from Switzerland.