Euro sucked below June lows on debt quagmire

Canadian dollar – As investors balk at the prospect of buying any available risk vehicles the Canadian dollar is in danger of falling to its lowest in three sessions. The loonie failed to benefit from positive data on Monday illustrating the reach and weight of the European crisis on sentiment. A housing starts report showed the annualized number of units construction workers began building in June was larger than forecast at 197,400 and beyond an upwardly revised pace of 194,100 in May. The Canadian dollar is in danger of falling below $1.0300 U.S. cents on Monday.

Aussie dollar – The Aussie unit is also under pressure against the dollar and at $1.0682 is closing in on support at $1.0657, a break below which has the potential all the way back to $1.0500 from where the recent surge of optimism over Greek resolution began. Adding to regional pressures on the Aussie was a stronger than hoped for reading of inflation in China, which saw investors quickly trash the view taken late last week that the Peoples Bank might soon abandon its tightening policy process.

British pound – A warning from the British Retail Consortium over weak sales and a prediction that the British economy remains vulnerable to a global slowdown helped sink the pound although the situation on the continent was probably the strongest drag. The pound surged on Friday following the weak U.S. employment report only to see gains to $1.6078 evaporate on Monday leaving behind the entire day’s trading range with the unit slumping to its lowest in over two weeks at $1.5905. The euro weakened against the pound to reach 88.30 pence.

Japanese yen – The Japanese yen remained bid surging higher for a second day as the European sovereign debt crisis limped forward. The yen gained against the single currency to a session high at ¥112.72. Interestingly the last time it traded that high was in mid-March when the Bank of Japan led a round of concerted yen selling aimed at restraining the unit from spiraling out of control one-week after the earthquake shook Japan. The yen also jumped against the dollar to reach ¥80.29 in a ding-dong-pitch-battle with the U.S. unit, which was, until Friday, going the way of the dollar. The perception that the world’s leading economy could overcome a possible double-dip was shattered with a rather weak employment report. Investors pounced on the yen on fears that a second-half pick-up in growth was becoming questionable.

Andrew Wilkinson is a Senior Market Analyst at Interactive Brokers LLC

Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

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About the Author
Andrew Wilkinson

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.

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