Forex Asia Review – Aussie Dollar drops after RBA policy meeting minutes

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The Euro climbed to a session high of 1.4135 against the Dollar from the open of 1.4111 then fell. The Single Currency is likely to remain volatile ahead of the emergency meeting of EU leaders scheduled for Thursday, its outlook clouded by heightened concerns that the debt crisis engulfing Greece may capture Italy and Spain as well, since their bond yields have surged to unsustainable levels recently. Meanwhile, the Dollar is looking to be a better choice over the Euro since markets expect an eventual agreement on the U.S. debt ceiling.

 

 

GBPUSD followed on the back foot of the Euro, with lack of UK-specific fundamentals, Sterling took direction from events elsewhere, mirroring the EURUSD. Cable opened the Asian session at 1.6055, reached a high of 1.6081 and fell again as general risk appetite was dampened by concerns over both European and US debt. The environment is such that investors see no reason to proactively take risks.

 

 

USDJPY is still in consolidation, trading in a range between 79.13 and 78.98. Investors are playing it safe and are not willing to take on big risks until more is known on the U.S. debt ceiling and rescue package for Greece. Also, Japan is trying to keep the Yen down, as BoJ Deputy Governor Hirohide Yamaguchi said he is focusing on the negative impact a stronger yen could have on the economy, signalling the central bank’s readiness to ease monetary policy further if sharp yen gains threaten a fragile recovery.

 

 

The Australian Dollar fell to $1.0609 from its high of 1.0650 following the minutes of the Reserve Bank of Australia’s July policy meeting. This time the bank had changed tone to a neutral bias on rates, and implied they will take a wait-and-see approach to a rate hike, most likely holding on to current rate.

 

 

Gold prices retraced slightly from Monday’s record high of $1,607.08, moving down around $6 to a low of $1,607.18 due to profit taking. Gold will likely remain in demand as a safe haven as worries grow over the Eurozone debt crisis and also a growing threat of a U.S. government default.

 

 

 

EURUSD

USDJPY

GBPUSD

AUDUSD

EURJPY

GOLD

OPEN

(22:00 GMT)

1.4111

79.02

1.6055

1.0605

1605.18

DAY’S HIGH

1.4135

79.13

1.6080

1.0650

1605.23

DAY’S LOW

1.4095

78.98

1.6039

1.0596

1600.78

CLOSE

(06:00 GMT)

1.4113

79.07

1.6076

1.0625

1604.13

Note: Daylight Saving Time is in effect for GMT