The euro rebounded to the upside against the U.S. dollar during the European session, recovering the losses incurred earlier as Papandreou's ruling party split over his call to hold a general referendum on the second bailout deal, which indicates that the Prime Minister could have lost his majority, and in result the referendum could be cancelled and Papandreou could resign pointing at an early elections to take place.
Positivity spread in the market, as we can see currencies rebounded to the upside against the low yielding U.S. dollar in addition to the optimism which dominated European stocks after the Greek finance minister along with Papandreou's ruling party split over the referendum which could put Greece in a critical situation, especially after European leaders cut off the entire financial aid for Greece including the sixth installment of last year's bailout package, noting the Greece could face a disorderly default as soon as December without any financial aid.
On the other hand, Europe remains the main focus in the market; however, the European Central Bank rate decision highlights the session today with all eyes are looking forward to the fresh President Mario Draghi, awaiting the steps and measures taken by the Bank to ensure liquidity, financial stability and fast recovery, especially after unemployment surged to 10.2% while inflation lingered at 3%, in the time manufacturing and services sectors deteriorated further in October.
The euro gained strength against the U.S. dollar, where after opening the session in Asia at 1.3745, the EUR/USD pair recorded the lowest at 1.3655, but then rebounded to the upside reaching a high of 1.3828, while the pair is currently hovering around 1.3815, extending the gains recorded yesterday, yet recovering some of the losses incurred this week.
On the other hand, the U.S. dollar index (USDIX) declined sharply after reaching a high of 77.49, affected by the optimism which spread in the market after the upbeat news from Europe, where demand for the greenback retreated as investors turned from demanding the dollar to avert risk into risky assets after their risk-appetite improved.
The USDIX also recorded the lowest at 76.66, and is currently trading around 76.72, noting that the index opened the session in Asia at 77.06.
Moreover, the sterling pound appreciated against the U.S. dollar as optimism dominated the market and despite the downbeat services figures from the United Kingdom, which showed that the services sector's performance slowed beyond expectations in October to 51.3 from 52.9, worse than estimates of 52.0.
The GBP/USD pair started the day at 1.5945, and recorded the highest at 1.6027 and the lowest at 1.5875, and trades in the moment at 1.6020.