Euro extended losses against the dollar following from news that Standard & Poor’s said it may downgrade many euro zone countries if their leaders fail to be more decisive on solving the euro zone debt problem at the EU summit by this Friday. This means six countries, including Germany and France, could lose their AAA ratings. EURUSD began falling since the report late on Monday and opened Asia at 1.3393 to continue declining to 1.3380.
Looking ahead, this week may prove to be more volatile for the euro as the EU Summit and European Central Bank meeting approach closer. There is growing speculation that the ECB will cut interest rates at its policy meeting on Thursday and offer fresh liquidity measures for banks.
Sterling opened in Asia at 1.5647 and eased down to 1.5613 as risk appetite was off in the Asian session. Equity markets in Asia dropped sharply, with the benchmark MSCI Asia Pacific Index of stocks dropping 1.2 percent.
Against the yen, the euro fell 103.91 yen from the Asian open of 104.23. Dollar was little changed against the yen, trading a range since late Tuesday, finding support at 77.67.
The Australian dollar fell against all of its major counterparts after the Reserve Bank of Australia announced it cut interest rates by 25 basis points for a second month in a row due to global growth concerns. AUDUSD fell to 1.0165 from the Asian open of 1.0267.
The New Zealand dollar also fell against the US dollar due to the damp risk sentiment and after the RBA rate cut. NZDUSD dropped to 0.7748 from 0.7796.The focus turns to the central bank of New Zealand’s policy meeting on Thursday and whether it will also cut rates.