Forex Magnum

The euro (EUR) advanced to 1.2441 from 1.2524 today against the US dollar on an improved risk appetite in the market. Better than expected US economic data raised hopes that the world’s largest economy is recovering boosting world equities as well as demand for riskier assets. But the single currency appears fragile ahead of the two-day EU summit where leaders are expected to be divided on how to tackle the eurozone debt crisis and avoid a debt contagion. EU leaders are under pressure to deliver a plan to prevent the collapse of the single currency following the recent victims of contagion Cyprus and Spain. In a scenario where the EU summit disappoints the euro may be under pressure as focus may turn to the European Central Bank monetary policy meeting. Investors speculate that the ECB may cut the interest rates following the ECB member Praet’s comment that said that there is no doctrine that interest rates cannot fall below 1%.

The US dollar (USD) weakened against a basket of currencies on a lower demand for the safe haven currency. Versus the safe haven Japanese yen (JPY), the greenback fell to 79.33 from 79.86. Positive US economic figures improved sentiment after US home sales and durable goods orders rose significantly more than expected. Attention shifts to the US Initial Jobless Claims and Gross Domestic Product expected later today.

The British pound (GBP) had a mixed session dropping against the greenback to 1.5545 from 1.5640 but later the pair climbed to 1.5623. The Bank of England said that Britain’s economic outlook has worsened in the past weeks due to the eurozone problems and BoE governor Mervyn King’s comments raised expectations for a new round of asset purchases next month. Eyes turn to today’s final Gross Domestic Product reading from the UK.

Oil edged higher to 80.84 dollars a barrel from 78.67. Gold (XAU) slid to 1562.49 dollars an ounce but later bounced back to 1583.44 and against the euro it rose to 1262.55 from 1258.90. Silver (XAG) fell to 26.66 dollars an ounce and later climbed back to 27.33. Stay in tune throughout the day with foreign exchange bullets!

Equities	EUROPE				US				ASIA3
	FTSE 100	1.41%			S&P 500	0.90%			NIKKEI	1.65%
	DAX	1.50%			DJIA	0.74%			HIS	0.27%
	CAC	1.67%			NASDAQ	0.74%			CSI 300	0.06%

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