The USD gains from safe haven status as the Euro waits for a result from Thursday’s summit

27 Jun 2012 at 4 PM - Written by Toni Johnson

STORY LINK The USD gains from safe haven status as the Euro waits for a result from Thursday’s summit

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 fortunes of the Euro depend on the outcome of Thursday EU summit, any firm plans for a roadmap toward forming a common banking union or a decision to trigger the euro zones rescue funds in order to buy Spanish and Italian debt could provide much needed relief for the Euro.

German leaders have deflated expectations of any breakthrough from the two-day summit which starts on Thursday, but investors are reluctant to sell the euro aggressively in case any progress in tackling the debt crisis is made. Another factor checking the euro's losses is the fact that speculators already have large bearish bets against the common currency.
Italy’s six-month borrowing costs rose to 2.957 percent at auction on Wednesday, their highest since December. The spike comes just ahead of a five- and 10-year debt sale for up to 5.5 billion Euros on Thursday. On Tuesday, Spain saw its short-term borrowing costs nearly triple.
German leaders have deflated expectations of any breakthrough from the two-day summit which starts on Thursday, but investors are reluctant to sell the euro aggressively in case any progress in tackling the debt crisis is made. Another factor checking the euro's losses is the fact that speculators already have large bearish bets against the common currency.

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