Posted on July 2, 2012 by Trading Point Investment Research Desk at 6:03 am GMT
Euro ended a sharp rally against the dollar as investors took profit in the Asian session on Monday. The single currency had gained 2 percent on Friday after the EU Summit resulted in steps to be taken to help tackle the European debt crisis.
EU leaders agreed on a plan to allow bailout funds to pump money directly into troubled European banks, rather than make loans to governments to bail out the banks. The move rescues the banks without putting strapped countries deeper in debt.
Looking ahead into the European session open, economic data on European PMI figures are in focus. Final revisions of euro zone numbers are expected to confirm region-wide factory sector growth shrank at the fastest pace in 3 years. The data could weigh on the euro. EURUSD opened in Asia at 1.2675 and slid to 1.2613. Sterling also fell, with GBPUSD down from 1.5695 to 1.5648.
Yen gained against the dollar and euro on better Japanese data. The Tankan confidence index improved as large Japanese manufacturers became less pessimistic about their economy. The quarterly Tankan index of sentiment was minus 1 in June from minus 4 in March. USDJPY fell to 79.48 before the European session from 79.96, while EURJPY dropped to 100.32 from 101.26.
AUDUSD was the only major that gapped higher in the Asian open to hit an early high of 1.0267 versus Friday’s close of 1.0241. The pair then corrected to 1.0211. Focus shifts to the Reserve Bank of Australia interest rate announcement tomorrow.
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