By Nikoletta Panteli from easy-forex
EUR/USD
The Euro strengthened at the start of the new week against the US Dollar after Federal Reserve Chairman Ben Bernanke’s comments weighed on the dollar. The pair opened at 1.3283 and rose as high as 1.3385 after Bernanke said on Monday that the US labor market needs a further improvement in the economy in order to recover. He offered no indication of whether there would be a third round of quantitative easing but investors are expecting that the Fed may continue to keep interest rates at their super-low levels. Although, recent economic data show strong signals that the US economy has entered the road to recovery and the unemployment rate has dropped to 8.3%, market conditions remain “far from normal”.
However, the single currency remains under pressure as market players are concerned about the debt problems of the eurozone periphery countries such as Portugal and Spain. The Spanish yields rose this week on fears about the government missing its deficit targets and the Spanish banking system. All eyes turn to the EU summit this week with European leaders where they are set to increase the size of the eurozone bailout fund. Investors are now turning their focus to the US Durable Goods Orders and Gross Domestic Product for any signs of a US economic recovery. Eurozone Economic Confidence and Industrial Confidence are also due this week.
GBP/USD
The British Pound appreciated versus the US Dollar on the first day of the week, supported by a weaker US dollar. Bernanke said during his speech on Monday that the US labor market needs a faster economic growth and this comment weighed on the dollar. The weaker dollar in combination with expectations of further signs of economic improvement in the UK pushed the pair higher. The pair opened at 1.5879 then dropped to 1.5801 before rising as high as 1.5998. Focus now turns to the UK Gross Domestic Product due later this week.
EUR/JPY
The single currency rose versus the Japanese Yen on Monday after the Bank of Japan interest rate decision. Talks say that German Chancellor Angela Merkel approved an increase in the region’s financial firewall ahead of a finance ministers meeting in Copenhagen later this week. Last month, the Bank of Japan surprised the markets after a decision to ease its monetary policy through asset purchases in order to support the economy. The central bank also said that it remains ready to act and weaken the Yen if needed as a strong Yen may be negative for the Japanese exports. The pair opened at 109.72 this week and rose as high as 110.92 recovering from a low at 109.17.
EUR/GBP
The single currency edged higher against the British Pound on Monday rising as high as 0.8371 after opening at 0.8365. The single currency got a boost yesterday after Germany signalled it was willing to increase its resources available to bailout debt stricken eurozone countries as well as by positive economic data from Germany. Eyes now turn to Spain as the Spanish bond yields rose ahead of the budget presentation on Friday.
USD/CHF
The Greenback was weaker against the Swiss Franc as the week commenced. On Monday, the pair opened at 0.9073 and rose as high as 0.9136 but later dropped at 0.9016. The International Monetary Fund (IMF) released a report, encouraging the Swiss National Bank (SNB) to remove the 1.20 floor set on EURCHF as soon as inflation is at comfortable levels, and growth accelerates. The SNB has set a floor at 1.20 for the Euro versus the Swiss Franc, and the pair is trading close to that. No major economic data is expected this week from Switzerland.