Forex Asia Review – Euro falls after lack of progress in EcoFin meeting

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The euro is under heavy pressure as it fell sharply upon the open of the new trading week against the dollar. Markets were disappointed with the unproductive European finance ministers meeting in Wroclaw, Poland over the weekend. The officials delayed a decision until October on whether or not to release the next aid tranche to Greece. The debt crisis in Greece is weighing heavily on the euro as Greek Prime Minister George Papandreou cancelled his visit to the United States in order to chair an emergency meeting in Athens. EURUSD gapped down in the Asian open to 1.3690 and continued to decline to a session low of 1.3646.

 

GBPUSD opened Asia at 1.5726 this morning, lower than the 1.5783 close in New York on Friday, as risk aversion pushed investors to sell off sterling and buy dollar from the open following the lack of a solution to the eurozone debt problems at the conclusion of the weekend ECOFIN meeting.

 

AUDUSD opened lower at 1.0299 gapping down almost 60 pips from Friday’s New York close, taking direction from the EURUSD. Overall risk aversion affected the commodity-linked currency prompted by a series of euro-negative news from the weekend which led to a sell off in risk currencies and purchase of safe haven dollar. After an initial consolidation in the first half of the session, AUDUSD fell down to 1.0224 dragged down further by falling Asian bourses.

 

USDJPY opened Asia at 76.87 gapping higher from US session close on Friday at 76.77. The Asian session was decidedly “risk-off”, as a weekend full of negative news from the euro zone has intensified speculation that Greece may not receive its next aid tranche. The pair could only manage a 76.84 – 76.97 range through out the Asian session as a broadly stronger US dollar underpinned while EURJPY selling kept further gains in the USDJPYcapped, as the euro tumbled to 104.95 against yen compared to Friday’s NY close at105.89.

 

USDCHF opened up at 0.8805 from the close on Friday at 0.8753 pushed up by a broadly stronger dollar. Investors sought safety in the alternative safe haven of the US dollar since the Swiss franc is now under watch by the Swiss National Bank which is trying to curb excess franc strength. The central bank intervened on September 6 and introduced a ceiling of 1.20CHF against the euro, resulting in the pair trading in a tight range since then.

 

Gold opened the week up from Friday, continuing the ascent from the previous session’s 1.2-percent rise, as euro zone’s debt crisis pushed investors to seek refuge in the safe haven precious metal. The failure of the European finance ministers to come up with anything concrete is a huge disappointment for the markets. Spot gold opened up at $1,817.26, around $7 an ounce higher than Friday’s close.