There were plenty of events and economic data releases for the foreign exchange markets to digest last week. Despite parliamentary approval in Germany on the second Greek bailout and liquidity funding of €530 billion by the ECB to support European banks, the euro came under growing pressure. Not that it makes too much difference any more but on Friday Moody’s Investors Service cut Greece’s sovereign debt rating to the lowest possible level.
Last week the euro hit a high against the US dollar of $1.3485 before a steady sell-off saw EUR/USD close trading in London on Friday below the $1.32 level. Similarly, sterling gained almost two cents against the euro with GBP/EUR breaking €1.20 before easing back. US dollar gains over the weekend have pushed GBP/USD back below $1.58.
The trigger towards a stronger US dollar appears to have been Ben Bernanke’s testimony to congress which was fewer downbeats than expected and suggests further US quantitative easing is less likely.
The Bank of England and European Central Bank meet on Thursday, and the week ends with US employment data.
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