The Euro extended gains over the Dollar after EU leaders agreed on a bailout package that would make it easier for Greece to reduce debt more sustainably by easing terms of loans and by making Greek bond investors shoulder some of the burden. Also the Summit resulted in a n agreement to increase the EFSF powers so they can intervene in the bond market. EURUSD ticked up to a high of 1.4436. Meanwhile, as the Euro recovered the Dollar weakened due to the U.S. debt ceiling issue still far from being resolved.
Sterling rose to a five-week high against the Dollar, just as Asia was opening, ticking above the previous session high to reach 1.6337 before consolidating into a range. Cable still enjoyed the good news on the EU deal. EURGBP saw profit-taking bring it down from the high of 0.8843 to 0.8818, then closed the session at 0.8826.
The Japanese Yen weakened against all its major peers as renewed risk appetite dampened the yen as it is traditionally viewed as a safer more liquid currency and investors turned to more riskier assets. Bond risk fell amid optimism European officials will contain the region’s debt crisis boosted market sentiment and risk appetite. USDJPY rose to 78.72.
The Australian Dollar settled in a range after surging to an eight-week high against the Dollar. Aussie gained over 165 pips from the Thursday low to hit 1.0856 in the Asian session. As with other risk currencies, investors turned back to risk after European leaders finally made progress in dealing with Greece’s debt problems.
Gold prices settled in a range hovering near the lows reached in the previous US session when gold fell following a leak on news that a proposal to give Europe’s financial rescue fund new powers to fight debt contagion. This drew investors to riskier assets at the expense of safe havens. Spot gold traded between highs of $1,591.92 and lows of $1,587.69.