High Yielding Currencies Slip on European-Recession Concerns

The euro reversed sharply to the downside, pulling other high yielding currencies, where after the downbeat fundamentals from the old continent, pessimism spread widely leaving investors with no appetite for risk, the thing that led them to leave high yielding currencies for wealth protection, leading a sell-off wave across the forex market.

The Manufacturing sector deteriorated sharply in April, led by the largest economy in the euro-area region, where the German manufacturing sector contracted sharply beyond expectations in the month, which was confirmed by the final reading today.

Moreover, data released today showed that unemployment unexpectedly surged in Germany and the euro zone, where the German unemployment rose to 6.8% from the previous of 6.7%, the lowest since creating the euro. Joblessness in the euro-area region also surged to 10.9% from the previous of 10.8% in line with expectations, adding more pressures on the weak economy which is expected to slip back into another phase of deep recession.

The euro retreated sharply against the U.S. dollar and the sterling pound, where the EUR/USD pair recorded a low of $1.3134 compared with the opening level of 1.3234, while the EUR/GBP pair dropped sharply to a low of 0.8111 after starting the session today at 0.8158.

The sterling pound depreciated slightly against the low yielding greenback affected by the pessimism driven by European markets; however, the pound remains relatively stable due to the upbeat fundamentals from the United Kingdom.

The USD/GBP is trading in the moment around $1.6199, down from the opening level of $1.6219, noting that the pair recorded the lowest today at $1.6184.

The Japanese yen found some support after the downbeat fundamentals from Europe, where the USD/JPY pair reversed to the downside after investors started to demand the Japanese yen in order to avert risk.

The USD/JPY pair started the session at 80.06 and recorded the highest at 80.61 and the lowest at $80.03 and is currently trading around 80.30.