Forex Asia Review – Euro dips after Spain rating downgrade by S&P

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EURUSD fell after news that Standard and Poor’s downgraded Spain’s credit rating to AA- from AA, putting pressure on the euro. EURUSD opened in Asia at 1.3778 and fell to a low of 1.3722 as investors became concerned about Europe’s ability to contain the sovereign debt crisis. Euro remained above key support levels, and also supported by hopes that the upcoming EU and G20 summits will unveil some lasting solution to contain debt and recapitalize banks as promised by Germany and France. EURUSD soon recovered back up to 1.3790 as investors bought on the dip.

 
GBPUSD opened in Asia at 1.5761 and headed down to 1.5720 early after S&P announced it had cut Spain’s sovereign rating a notch, then bounced back to 1.5755 as sentiment recovered. EURGBP opened at 0.8737 and fell to 0.8720 on the S&P downgrade news before bouncing later to 0.8747.

 

USDCHF advanced to a session high of 0.9008 before later falling back to 0.8971 in line with the US dollar moves, which were see sawing up and down in Asia. EURCHF as trapped in a tight 1.2352-76 range.

 

AUDUSD opened the session at 1.0189 and dipped to 1.0145 as S&P downgraded Spain. Trading sideways for a time, it eventually bounced up to 1.0198 before the end of the Asian session as the US dollar weakened across the board. Some regional news helped boost the Aussie, like China’s inflation not slowing down, as CPI came out as forecast. China is Australia’s major trading partner and most exports go there.

 

USDJPY remained range bound since the surge to a month high of 77.47 on Wednesday. EURJPY retraced to a low of 105.58after the Spain downgrade before bouncing to 106.05.