Forex Market Review – Euro steady in Asia; dollar trims gains

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Euro was little changed in Asian trading on Wednesday after tumbling to an eleven-month low against the dollar in the prior session. Euro fell sharply on Tuesday after German Chancellor Angela Merkel expressed her opposition to raising the lending limit of the permanent euro zone bailout fund, the European Stability Mechanism, which is due to come into operation in July 2012. The focus now turns to Italy’s bond auction later today as well as EU industrial production data for October. Any bad news will push euro down further.  The coming days are crucial for the single currency as Standard and Poor’s are expected to release their decision on whether they will downgrade any euro zone countries.

 

EURUSD hovered around the critical $1.30 level during the Asian session after opening at 1.3035.  Lows and highs were 1.3015 and 1.3043.

 

The U.S. dollar took a breather after recent gains and took a pause during the Asian session. The dollar gained against major counterparts in the previous North American session after the U.S. Federal Reserve kept the interest rate unchanged at 0.25 percent and did not signal and more stimulus measures. (which usually weakens the dollar). The dollar index which measures the greenback against a basket of six currencies, dipped slightly from Tuesday to 80.289 versus 80.303.

 

The dollar was little changed against the British pound. After dropping some 160 pips on Tuesady, sterling steadied against the greenback between 1.5465-1.5494. The dollar bought 77.92 yen at the lowest point in the session. USDJPY highs were 78.03. AUDUSD traded mostly flat between  0.9983 – 1.0029.