Forex Asia Review – Asian markets remain risk off after EU Summit

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Euro consolidated around 22-month lows against the dollar during the Asian trading session as Greece and turmoil in the euro zone continue to drive markets. The informal summit of European Union leaders that concluded late on Wednesday resulted in little in terms of concrete  solutions to tackle the sovereign debt crisis. There was no progress made on the matter of creating a jointly issued euro bond, as Germany remains strongly opposed. No new light was shed on the risk of Greece exiting the euro and the continuing uncertainty ahead of the Greek elections on June 17 will keep the euro bearish.

 

EURUSD opened in Asia at 1.2580 after having hit a fresh 22-month low of 1.2544 in the US session. The pair consolidated around those levels as many market participants preferred to wait on the sidelines for more developments from Europe.

 

GBPUSD traded a tight range between 1.5675 and 1.5699, consolidating losses above a two-month low.  Sterling was hit hard on Wednesday by soft UK retail sales data and lack of any major news following the EU leaders summit kept the currency down against a broadly stronger dollar which benefits  from safe haven flows during risk aversion.

 

The Japanese yen remained firm after gaining against most major counterparts on increasing demand for safe haven assets amid the deepening European debt crisis. On Wednesday the Bank of Japan kept monetary policy unchanged, which gave a further boost to yen. USDJPY  traded sideways in the Asian session between 79.40 and 79.55 after trimming some losses following Wednesday’s tumble. EURJPY consolidated between 99.70 and  100.15, not far from a 3-1/2 low hit yesterday.

 

AUDUSD opened in Asia at 0.9744 after rallying from a six-month low of 0.9688 late in the US session. The pair took a pause from a sharp decline and was due for a technical correction. Aussie was little changed after China PMI data but remains under pressure as market  sentiment remains risk-off.