EURUSD surpassed the previous session high to peak at 1.3565 in Asian trading following a sudden turnaround in investor sentiment from extreme scepticism to tentative optimism. The result was due to several news reports that the EU was putting a plan together to deal with its debt and banking crisis. CNBC said one plan involves setting up a special purpose vehicle to buy distressed debt from banks and issuing them with new paper that could be exchanged with the European Central Bank (ECB).
GBPUSD rose to its highest level in almost a week helped by improved market sentiment and renewed interest in risk currencies after a series of reports about how euro zone authorities were considering bolder steps to tackle their problems lifted the mood. GBPUSD peaked at 1.5589.
EURJPY opened Asia at 103.33 and climbed steadily to 103.55 on the upbeat sentiment following news reports regarding efforts to the stem the debt crisis. USDJPY remained range bound as the broadly weaker dollar failed to gain too much ground against yen but remained supported above 76.24 for fear of a BOJ intervention. Early this morning there was a report that the Japanese government said it wants to bring forward steps to ease the pain some companies feel from a stronger yen and enact the measures before it completes an extra budget to fund reconstruction spending. “The government will carry out the measures ahead of time before downside risks to the economy materialise without waiting for the completion of the third extra budget,” the cabinet office said in a statement.
AUDUSD rose to its highest level since last Thursday as news of a new plan to deal with EU debt led to a rebound in riskier assets like commodities and equities which helped lift the aussie. AUDUSD moved well of a ten month trough of 0.9621 to peak at 0.9881.
Spot gold rose to $1,644.88in Asia, rebounding from a $1,532 low hit in the previous session, as a weaker dollar buoyed dollar-denominated commodities.