EUR/USD
The Euro continues to hover around its two-month high against the Dollar this morning, as more and more investors are buying higher-yielding currencies amid a surge in risk appetite. This recent risk rally pushed the EUR/USD up from 1.2525 lows to back above the 1.2700 mark. Currently the pair is trading at 1.2705 after reaching an eight week high of 1.2735 earlier in the morning.
Helping drive risk appetite sentiments was a robust start to the U.S. corporate earnings season in conjunction with reduced concerns over the Euro Zone’s debt crisis. The Euro slipped yesterday afternoon following Moody’s decision to cut Portugal credit rating by 2 notches to A1; however, the single European currency recovered to touch on a two month high of $1.2739 yesterday afternoon following a strong response to the Greek government bond sale. The Euro also benefited from a wider than expected U.S Trade deficit, which widened by 4.8% in May. Economists had predicted the trade gap to narrow to $38.8 billion from $40.3 billion in April; instead a larger rise imports over exports forced the deficit to grow to $43.3billion.
Up ahead, investors will want to watch intraday support of 1.2690. If that area holds it may signal an emergence of buyers who are entering the market to accumulate positions in the pair, which could indicate another rally for the Euro.
GBP/USD
The GBP/USD rose to a 2-day high of 1.5166 yesterday following the release of the U.S’s worse than expected trade deficit. Helping the Pound’s recent rally was a report showing that consumer prices increased, as expected, by 3.2% in June, from a year earlier. Up ahead, this morning’s UK Claimant count change, the earliest report of unemployment in the UK, could cause volatile movement for the GBP/USD. After last month’s drop of 30.9K, a smaller drop of 20.3K is predicted this time. The unemployment rate is expected to hold at 7.9%.
USD/CAD
The Canadian Dollar rose to its highest level in nearly three weeks against its American counterpart following a surge in prices for raw materials, namely crude oil. Yesterday, the Loonie touched on a high of C$1.0277, its strongest level since June 23. The USD/CAD then consolidated to close around C$1.030, up 0.7% from the prior day’s closing price.
Canada unexpectedly posted a trade deficit of C$0.5billion in May, as imports of machinery and equipment outstripped a rise in exports. Meanwhile, Canada’s trade surplus with the United States, its largest trade partner, rose to C$3.59 billion from C$3.46 billion.
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