The Pound broke through the 1.25 region against the Euro and briefly reached a four year high against the single currency. The news that Cyprus has become the fifth European country to seek financial aid led to investor’s seeking safe havens as the fear of contagion continues. The outcome of tomorrows EU summit will have a profound effect on the Pound Euro currency pair as if a plan is agreed upon we could see the Euro make gains as confidence returns. If no solid plan is agreed upon then it is likely the Euro will suffer further losses.
A positive outcome could see the Pound add to its small gains it made against the US Dollar. It rose from the 1.53 level at the beginning of the month to 1.565 this morning. A good result from the summit could see it make further gains to the 1.58 level.
The US Dollar saw further gains against the Euro yesterday as the low expectation from investor’s ahead of Thursdays EU summit has seen confidence in the single currency wane over the course of the week. The ‘Greenback’ is benefitting greatly from its status as a safe haven currency as risk sentiment remains low ahead of the summit. The EUR/USD fell over 70 pips yesterday reaching a low of 1.245 before recovering slightly to the region of 1.249. Against the Japanese Yen the Dollar wasn’t as lucky; it hit a low of 79.22 before ending the day in the 79.50 region.
Today, Dollar traders will want to pay attention to some US news, including the Core Durable Goods and Pending Home Sales figures, which are regarded as an accurate gauge of overall economic health. Both indicators are forecasted to come in higher than last month's results. If they do, the Dollar could recoup some of its losses against the Yen during the afternoon session and possibly extend its bullish trend against its higher-yielding rivals.
The single currency has seen a slight gain against the US Dollar this morning after hitting a two week low yesterday. Any further gains are on hold however as markets await the result of the EU summit on Thursday. The pound climbed to be the strongest currency this month against the euro amid speculation European Union leaders meeting this week will fail to agree on measures to stop the debt crisis from spreading to more Eurozone nations. The EUR/GBP is trading in the region of 0.799 this morning. The Euro is expected to be in a holding pattern for today as any further gains or losses depend on tomorrow’s summit.
THE Australian dollar has risen, despite a lack of global events news ahead of the key European Union meeting. The Australian dollar is trading in the region of 100.52 US cents, up from 100.24 at Tuesday's close. News that Australia’s export earnings have jumped by 8% did little to boost the currency as investors’ remain firmly focused on the Eurozone.
New Zealand Dollar
The ‘Kiwi’ traded slightly lower against the US Dollar as investors seek a safe haven ahead of the EU summit. It is expected that the currency will not see any big changes until the outcome is unveiled. The New Zealand dollar fell to 78.46 Australian Cents from 78.60 Cents and slipped to 62.74 Yen from 62.87 Yen. The ‘Kiwi’ dropped to 63.16 Euro Cents from 63.31 Cents.
It was largely unchanged on 50.51 British Pence from 50.55 pence.
The Canadian Dollar strengthened from the lowest in more than two weeks against its U.S. counterpart as investor aversion to higher-returning assets eased. It rose 0.5% to .023. Currently one Canadian Dollar buys 97.41 Cents.
The currency remains down this month against most of its peers on concern that European leaders meeting this week will fail to resolve the region’s debt crisis, dimming the outlook for countries that rely on export commodities.