The Euro recovered in the Asian session after having closed down from the previous European session. EURUSD opened at 1.4085 and kept advancing throughout the session gaining over 40 pips, recording highs of 1.4171 and lows of 1.4067 before closing up at 1.4164. The Single Currency was given a boost aft reports that China was interested in buying Portuguese bonds that will be issued in June. The news alleviated some concerns about the European debt crisis since one of the world’s largest economies is willing to take on some of the bail out bonds that will be issued to aid debt-ridden Portugal. Meanwhile, stronger commodity prices also helped buoy the Euro. Crude oil managed to break above $100 a barrel for the whole session, closing up at $101.59. As the US Dollar began weakening after poor US Durable Goods Orders data, investors turned back to the Euro.
Sterling extended gains from the prior session, edging up over 60 pips to highs of 1.6270 from the 1.6270 open. GBPUSD closed at 1.6312. The Dollar decline helped lift the Pound as well as Asian sovereign buying to short cover. Bank of England policy maker Andrew Sentence gave some confidence by mentioning in his speech on Wednesday that the British economy is ready for an interest hike.
The Japanese Yen gained against the weaker US Dollar, with USD JPY down in Asian trading, from highs of 82.07 down to lows of 81.68. This week Japanese Trade Balance data indicated a larger than expected imports versus exports which shows a better performing economy versus the US which yesterday released disappointing data on Durable Goods Orders.
The Australian Dollar continued the uptrend from yesterday opening at 1.0529 and closing up at 1.0591. Highs were hit at 1.0601. Aussie was given a boost by rising commodity prices. The Aussie is a commodity-linked currency, meaning it has a tight correlation with commodity prices, and usually mirrors them. Australia is a large producer of gold which has been rising steadily in the session. Meanwhile, comments made by Middle-East representatives at the G8 Summit currently underway were positive for commodities.
Gold has been holding above the key $1,500 level since last Friday. The precious metal is buoyed by demand as investors turn to the safe haven investment to shelter themselves from European debt problems after Greece was pushed further into junk status last Friday. Spot gold reached three-week highs on Wednesday touching $1,532.03. After some profit taking spot gold dipped briefly to continue rising in Asian trading to gain over $3, closing at 1529.23 from the open price of $1,525.63