Yen strengthened against most of its counterparts after the Bank of Japan kept its monetary policy unchanged. While this decision was in line with the expectations of most market participants, there had been some speculation recently that the BOJ could follow up with new easing steps after its monetary easing in April since Japan is still trying to increase growth after the devastating earthquake last year. USDJPY fell to 79.50, down 0.5 percent in the Asian session. EURJPY fell 0.6 percent to 100.72.
EURUSD opened in Asia at 1.2682 after a sharp sell-off late in the US session following comments from ex-Greek Prime Minister Lucas Papademos that euro zone officials were looking at contingency plans for a Greek exit from the euro. This story was later denied and helped slow the descent in the euro but will remain under pressure as concerns linger over the Greek debt situation and we are just four weeks away from new elections in Greece. EURUSD briefly touched a low of 1.2644 before trimming some losses to bounce back to the1.2670’s level. Focus turns to the EU Summit which will be ending today.
The Australian dollar slid to a fresh six-month low as Asian bourses dropped, sapping risk appetite and reducing demand for riskier high-yielding currencies. AUDUSD resumed its downtrend, dropping to 0.9740, the lowest since November 25 of last year. The aussie is down 6.5 percent this month as concerns for global growth brought commodity prices lower and consequently weakening commodity-linked currencies.
The New Zealand dollar, another currency that often comes under pressure in times of risk aversion and when there is high uncertainty about the global economy, hit a five-month low against the US dollar in Asian trading. NZDUSD fell to 0.7486. The kiwi is down 8.5 percent so far this month against the greenback.