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European Session – Euro to end week lower ahead of Eurogroup risk, oil prices fall

The euro was flat against the dollar during the European and Asian session today and consolidated around 1.1200 as investors were being cautious ahead of key risk over the weekend. Another meeting of Eurozone finance ministers is scheduled for Saturday after Thursday’s meeting failed to reach an agreement on the Greek bailout issue.

The euro fell to 1.1154 as the US session came around on rumours that a Greek deal was near, based on comments from various officials. If the Greek risk is out of the way, markets would start to focus on the monetary divergence between the ECB and Fed, meaning that the dollar would rise versus the euro.

Sterling was also quiet today due to the risk-off sentiment in the markets and traded around 1.5740. There were no tier one UK economic data releases today, leaving broader market developments to drive the pound, although the immediate risk would be Bank of England Mark Carney’s talk at a panel discussion in London at the 2015 Conference on Inclusive Capitalism.

The dollar rallied sharply against the yen and regained all of the Asian session losses. The greenback rose to a high of 123.92. Earlier in the day the yen was lifted after the release of upbeat economic reports from Japan and also due to safe haven buying. But as the US session came around the greenback bounced back. Meanwhile, the final reading of the University of Michigan’s consumer sentiment index rose to 96.1 in June. This is the highest since January and beat forecasts for the index to stay unchanged from the flash reading of 94.6. The index was also up from a final reading of 90.7 in May. The main risk event for the dollar will be next week’s US non-farm payrolls report.

Commodity currencies fell sharply today after being dragged down by a sharp fall in oil prices and other commodities. Canada is a major oil producer and so the Canadian dollar slipped against its US counterpart. USDCAD jumped to 1.2396. Oil prcie fell back beloe $60 a barrel.

The Australian Dollar is on track to end the week lower versus the greenback and is likely to close below the key 0.7700 psychological level.

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