Forex Market Review – Euro steady in Asia as markets consolidated

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EURUSD was little changed in Asian trading on Thursday as the pair consolidated after huge losses from a fall to an eleven-month low. Euro is under pressure after yet another disappointing EU Summit last week. Yesterday Italian bond yields surged to euro-era highs at a bond auction, highlighting European leaders failure to tackle issues concerning funding. German Chancellor Angela Merkel opposes raising the lending limit of the permanent euro-zone bailout fund (European Stability Mechanism).

EURUSD opened in Asia at 1.2981and traded a tight 1.2978/97 range.

Looking ahead, Spain is holding a bond auction later in the day. Spanish yields have also recently seen new highs. Any surge in yields will hurt euro again. Economic data from Germany is due as well, which may show the manufacturing industry contracted for a third-straight month.

Meanwhile, any time soon Standard and Poors ratings agency are expected to release their decision on whether they will downgrade any eurozone countries.This review is critical for the euro.

The calm Asian markets led the dollar to ease slightly against its major counterparts though risk is still off. The dollar index which measures the greenback against a basket of six rivals, traded at 80.502 in Asian hours compared to 80.538 in late North American trading on Wednesday.

Some economic indicators from the Asian region disappointed and kept Asian markets damp. Japan’s index of sentiment among large manufacturers fell more than economists projected. Also a preliminary purchasing managers’ index showed China’s manufacturing may contract for a second month.

USDJPY traded a 78.02/14 range.

AUDUSD slid from 0.9907 to 0.9860.