Forex Asia Review – Euro falls further after soft China manufacturing data

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Euro edged lower during the Asian session to reach a new two-year low versus the dollar. Market sentiment was dampened by soft Chinese manufacturing data. This raises concerns about the global economic recovery, after GDP data from the U.S. yesterday also showed a slowing economy. The single currency is expected to remain under pressure as the euro zone sovereign debt crisis continues and Spanish banking troubles could lead to a bailout for Spain.

 

EURUSD opened in Asia at 1.2363 after a sharp decline in the U.S. session and extended its decline early in to Asian trading to a low of 1.2322, the lowest levels since June 2010.

 

GBPUSD fell to 1.5364, close to the 4-month low hit yesterday. EURGBP was slightly better bid, opening the session at 0.8024 and climbing to 0.8033.

 

USDCHF maintained the uptrend during the Asian session, edging up to 0.9743, hitting a new high since June 2011. EURCHF traded a range between 1.2004-10.

 

USDJPY opened in Asia at 78.34 after a sharp decline in the U.S. session and pulled back on profit taking to 78.63. EURJPY reached an 11-year low of 96.50  in New York trading hours and consolidated those losses during the Asian session, remaining above 96.74. Yen remained off its highs from yesterday after comments by Japanese Finance Minister Jun Azumi, who said Japan would act decisively against the Japanese currency’s rise if excessive market moves continue.

 

AUDUSD opened at 0.9731 and dipped to as low as 0.9647, dragged by regional stock market weakness and worse-than-expected China PMI data. China is a major trading partner for Australia and any sign of weakness there will weigh on the aussie. The official PMI fell to 50.4 in May. That was the weakest reading this year and was also below expectations.

 

Looking ahead, the U.S. non-farm payrolls due later today will be in focus