Euro Rally in Forex Trading

Euro is rallying after some earlier weakness as positive sentiment returns to the Forex market. Hopes for ECB/IMF money, as well as good news out of the US, are helping the 17-nation currency.

Earlier, the euro weakened as sentiment turned a little negative. US dollar made some gains, but those are being erased as the euro rallies on the latest round of news. There are rumors that the ECB will lend money to embattled eurozone countries via the IMF. This news is prompting hopes that eurozone countries will be able to get themselves out of the current mess.

On top of that, Forex traders are responding favorably to the latest economic news out of the US. November nonfarm payrolls show that the 120,000 jobs were added to the economy in November. Between this uptick in jobs, and evidence that US consumers are ready to spend this holiday season, it appears that America’s economy is slowly recovering.

This news is prompting some risk appetite, and encouraging the euro to head higher in Forex trading. How long the current sentiment will last is up for debate, but, for now, the euro is doing well enough.

At 15:08 GMT EUR/USD is higher at 1.3474, up from the open at 1.3462. EUR/GBP is up to 0.8599 from the open at 0.8580. EUR/JPY is higher at 104.9885, up from the open at 104.6050.

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Canadian Dollar Erases Daily Gains

The Canadian dollar retreated, losing its initial gains, after the report showed that the Canadian employment declined instead of rising as was predicted and the unemployment rate unexpectedly increased.

The Canadian employment was expected to rise by 18,100 jobs, but instead it decline by almost the same amount (18,600 on the seasonally adjusted basis) in November. The unemployment rate edged up from 7.3 percent to 7.4 percent, while market participants hoped it to stay unchanged.

Earlier, the loonie (as Canada’s currency is nicknamed) gained on the rumors about the proposal of the European governments to channel loans for supporting the Euro-region through the International Monetary Fund. The European central banks are forbidden to directly finance the nations’ budget, but directing money to the most-indebted nations through the IMF would allow the banks to help the battle with the debt crisis without violating the rules. The rumors speak about as much as €200 billion that may be channeled through the IMF to the debt-laden European countries.

USD/CAD advanced from 1.0137 to close at 1.0191, following the earlier drop to 1.0078. CAD/JPY fell from 76.58 to the closing price of 76.40, while intraday it reached 77.33, the highest rate since November 4.

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Swiss Franc Drops on Talks About Another Intervention

The Swiss franc declined as Switzerland signaled that it’s may take steps to further weaken then nation’s currency, which is already subdued by its peg to the euro.

The Swiss National Bank set the ceiling for the franc at 1.20 francs per euro on September 6. The SNB was trying to weaken the Swiss currency for several years, but it was the first time when the central bank was able to contain Swissie’s gains for a prolonged time.

The SNB also suggested that it may boost the cap further in case it would view the strength of the franc as excessive. And the Swiss central bank was continuously stating that it considers the currency overvalued. It’s no surprise that the government decided to support the central bank and signaled that it’s going to ”examine the feasibility of supporting measures”. The SNB itself stated that it would sell “unlimited quantities” of the currency to trim the franc’s appreciation.

USD/CHF closed at 0.9209, rising from 0.9156, while EUR/CHF closed at 1.2334, slightly above its opening level of 1.2325. CHF/JPY was down from 84.80 to 84.54.

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