The Euro advanced to almost a three-week high against the Dollar as concerns of a Greek debt default eased. Meanwhile economic data today (CPI flash estimate) may show European consumer prices climbed in June, fueling the prospects of an interest-rate increase next week. However, the focus will also be on whether the Greek government will be able to pass another vote today to actually implement the unpopular austerity measures its required to meet by the EU and IMF before the next round of bailout funds are needed. EURUSD rose to 1.4517 from the Asian open of 1.4433
Sterling rose to its highest level in over a week against the Dollar, lifted off lows it has been hovering at due to a slew of weak fundamentals and data indicating the British economy is still struggling. After the Greek vote passed austerity measures, risk appetite built up, which helped lift the Pound. Dollar weakness due to rising commodities and also the U.S. debt ceiling issue helped GBPUSD advance to 1.6117 from 1.6060.Gains may be capped as investors are awaiting the outcome of the second round of Greek voting later today in parliament in order to pass legislation to implement austerity measures.
The Yen extended gains against the Dollar over night, helped by ratings agencies announcements from Moody’s and Standard & Poor’s yesterday. They said they will cut the U.S. credit rating if the government fails to raise the debt ceiling, resulting in the U.S. getting into serious debt. President Barack Obama in his speech yesterday challenged U.S. lawmakers to make progress on a budget deal to avert a possible default in early August. USDJPY dropped to 80.32 from 80.76.
The Australian dollar soared to record high against the British Pound and hit an over three-week high against the Dollar in Asian trading. The Aussie was lifted after Greece’s parliament approved the first of two votes regarding austerity measures. Commodity currencies rallied across the board to boost the AUD which is a commodity linked currency, especially affected by gold prices. AUDUSD gained 70 pips to 1.0746, its highest since June 6. GBPAUD hit a 26 year low of 1.4984.
Gold prices did not show any significant movements, although there was a slight uptrend. The precious metal has been rising for three sessions, helped by an initial favorable vote on austerity measures by the Greek parliament and also lifted by a weakening US dollar. Any significant movement in gold prices depends on more news on US debt ceiling and whether there will be another stimulus plan in the U.S. after the current round of quantitative easing ends. Also the focus is on the Greek parliament meeting later today to approve legislation to implement austerity measures which they voted in favour of yesterday. Gold hit a high of $1513.78 in the Asian session.
Note: Daylight Saving Time is in effect for GMT