Forex Asia Review – Aussie extends fall after trade report; USD remains firm

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Euro continued to be hammered in the Asian trading session, under pressure after the hawkish Federal Reserve policy minutes late Tuesday boosted the dollar. Investors interpreted the Fed as less likely to introduce more stimulus measures, and thereby less keen on more quantitative easing. All this was dollar positive, and strengthened the dollar across the board. EURUSD opened in Asia at 1.3232 after a sharp 125 pip drop yesterday and extended a fall to 1.3183.

 

Euro is expected to remain vulnerable ahead of the ECB policy meeting later today. The benchmark interest rate is expected to remain at 1.0 percent and the ECB is expected to repeat that there are some early signs of a stabilization of the economy and that inflation will remain elevated for a while.

 

GBPUSD edged lower due to USD being bought across the board. After a steep decline to 1.5890 post-Fed minutes, cable opened in Asia at 1.5910 and drifted lower to 1.5872. Later in the day, UK Services PMI data are in focus.

 

USDJPY took a pause from a sharp rise late Tuesday after the Fed minutes, when the pair shot up to 82.98 from 82.07.  Profit-taking ensued during Asian hours, bringing the pair down to 82.60.

 

AUDUSD extended losses going into the Asian session, losing 1.4 percent since Tuesday’s Reserve Bank of Australia policy meeting. The sharp contrast between the RBA and Fed outlook as well as more weak Australian data today showing a terrible trade balance, weakened the aussie further. AUDUSD fell to 1.0262 from 1.0326.