Forex Asia Review – Euro steady ahead of ECB rate announcement

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EURUSD opened Asia at 1.3343 after rallying to 1.3382 in the previous session on optimism that European banks will be propped up with the help of the EFSF. Euro held steady throughout the session and was little changed as markets await the important European Central Bank policy meeting late today. Rates are expected to remain unchanged or even cut by 25 basis points.

 

GBPUSD opened in Asia at 1.5461 and lost 60 pips in the session as investors sold off the pound ahead of the Bank of England policy meeting today. Speculation is that the bank will introduce more quantitative easing. This would result in flooding the system with more pounds and thereby weaken the currency.

 

AUDUSD opened in Asia at 0.9654 after a rigorous rally in the US trading session. The aussie traded mostly flat in the Asian session as investors were cautious ahead of central bank monetary meetings both in Europe and the U.K..There is uncertainty on what the outcome will be and whether the ECB will cut rates. A 25 basis cut is anticipated and this would boost markets and risk currencies like the Australian dollar.

 

USDCHF traded mostly sideways in a 0.9217-55 range and not far from its recent highs. EURCHF consolidated gains and traded in a 1.2308-35 range.

 

USDJPY remained in a range and supported above 76.69. EURJPY was flat, supported above 102.20. Despite upbeat Asian stock markets, FX investors preferred to wait on the sidelines until important policy meetings by the ECB and the Bank of England today.