Euro moved further away from the seven month low on optimism that China will buy up Italian bonds. The Financial Times reported that Italy had asked China to make “significant” purchases of Italian debt. However sentiment remained weak as investors are still greatly concerned about a possible Greek default very soon. EURUSD traded highs of 1.3688 and low of 1.3620. Inflation data from France and Spain due later in the session will be the market’s next focus and any weakness in the figures could renew expectations that the ECB would cut interest rates.
GBPUSD opened in Asia at 1.5855 and initially headed down to 1.5791, giving back some of gains seen in previous session. Cable later bounced to 1.5866 due to short covering and most regional Asian bourses in positive territory helping lift the pair. EURGBP opened at 0.8621 and dipped to 0.8601 before bouncing to 0.8627.
The Swiss franc was little changed against the euro and the dollar, both pairs remained in an incredibly tight range as a result of the September 6 Swiss National Bank intervention in the currency markets to curb franc strength and introduced a ceiling of 1.20CHF against the euro.
The Australian dollar rebounded against the greenback as most commodity currencies were also given a slight reprieve lifted by slightly improved sentiment due to euro recovering and Asian bourses moving back in positive territory. AUDUSD managed to climb to 1.0374, well off a four-week low of 1.0255 reached last night in New York trading.
USDJPY has been oscillating due to aggressive bids by big firms but markets still cautious of more yen-weakening intervention by Japanese authorities. USDJPY erased gains made in New York after being overbought and moved back down to an Asian session low of 76.97 from the open of 77.20. EURJPY remained in a tight range.