Euro Zone event risks continue to rise, Euro sold off as risk aversion takes the lead
Risk aversion remains a dominant theme. Forex investors dump the “riskier “assets and rush to the “safe havens”.
The Euro remained pressured as media reports still suggest that the Euro Zone is still unable to address the contagion situation in an effective manner. Media reports suggest that no deal will be reached before the end of July. Meanwhile the ongoing uncertainty kept weighing on the Euro and the spreads of the countries’ mostly at risk keep widening when seen against the benchmark German Bunds.
Euro Zone Finance Ministers are meeting today to discuss the second bailout package as well as the overall situation with the weaker countries.
Triggering risk aversion were Friday’s US non Farm Payrolls, and Chinese data earlier this morning (showing slowing imports and stronger CPI readings). Both data continued to contribute to overall global economic risks.
The EUR/USD is down to 1.4026, after trading in the range of 1.4026-1.4227 so far today. The EUR/USD is back to levels last seen around the end of May. The Euro continues losing strength and is currently losing an average 1% when seen against the majors. Investors have rewarded their support to those currencies perceived as safer. The USD is up an average 0.57%, the CHF is up an average 0.70% whilst the JPY is up an average 0.80%, when seen against the majors.
Against the Swiss franc the single currency is back to record lows; the EUR/CHF reached 1.1694 throughout today’s trading.
Earlier today French industrial production rose to 2.0% from the previous -0.3% the numbers were however largely unnoticed as the debt contagion fears remained the key driver behind the Euro.
Canadian Housing starts continue to rise
Canadian housing starts for the month of June continued to rise. The data appeared to lend some support to the Canadian Dollar but the loonie remained on the losing side as risk aversion dominated investor sentiment.
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