Euro continued to rise to a three-week high against the US Dollar in Asian trading hours as fears of a Greek default subsided and after reports in a Greek online newspaper yesterday that Greece would finalize its mid-term fiscal plan by Thursday morning. Gains were capped as the Single currency neared resistance levels, peaking at its highest at 1.4436.
Sterling rebounded off Tuesday’s low edging up slightly from 1.6445 to 1.6479. Sterling was mainly buoyed due to external factors, being a weaker US Dollar after weak economic data in the U.S. was released yesterday. Meanwhile, UK Manufacturing PMI is due to be released later today which could change the direction of the Pound. EURGBP is rising steadily, hitting highs of 0.8769, helped by a stronger Euro after reports that Greece was close to reaching a deal with the troika (EU-IMF-ECB).
The Japanese Yen reversed yesterday’s trend and regained losses made after Moody’s rating agency said it is considering downgrading Japan’s outlook on debt to negative. The Yen was given a boost by a weaker US Dollar which was weighed down by disappointing economic data released yesterday, mainly the CB Consumer Confidence Index, dropping from 66.0 to 60.8 opposite to expectations. Also lower US Treasury yields dragged the greenback down. USDJPY dropped from 81.55 to 81.14.
The Australian Dollar rose by 90 pips against the US Dollar to a high of 1.0750 after GDP data was released. Despite a decline by 1.2 percent this contraction in the economy was much smaller than economists had predicted. The Aussie was also boosted by hawkish comments from the Bank of Australia Governor Glenn Stevens. Investors are confident he will raise interest rates as early as August.
Gold proceeded down to ease off its four – week highs as concerns in Europe and optimistic expectations of a prevention of a Greek default calmed markets. Investors who turned to gold as a safer investment in times of crisis are now shifting away to riskier investments. Spot gold fell from highs of $1,535.88 down to $1,529.53.