Forex Market Review – Euro bounces in Asia on short-covering ahead of debt auctions

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The Asian trading session was uneventful with most major currency pairs heading into a range as investors wait on the sidelines ahead of Wednesday’s events that will mainly affect the euro. As usual Europe is dominating the markets and the focus is on any news emerging from there.

Later today the euro will once again be tested when Germany and Portugal hold debt auctions. A successful sale especially from indebted Portugal will lift euro. Also attention is on Greece, which is starting to renegotiate their haircut again. Any negative news will pressure the euro lower.

EURUSD opened in Asia at 1.2734 and headed higher to 1.2785, recovering losses from the New York session.

Against the yen, euro has been see – sawing from 97.83 yen to a slight move up then back to 97.80.

The British pound pulled back in Asia from a drop in the US session, but then turned downside again. GBPUSD opened at 1.5330 after falling sharply on Tuesday following UK inflation data which slowed more than expected. This prompted speculation that the Bank of England may expand its quantitative easing program in February, which will have a weakening effect on sterling.

The Australian dollar slipped off its three-month high of 1.0447 hit against the US dollar on Wednesday. AUDUSD opened in Asia at 1.0373. The focus turns to Australian unemployment data due on Thursday. Any disappointing numbers will pressure the aussie.