Forex News – Euro extends losses on debt concerns; dollar strengthens

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Euro fell further in the Asian trading session as sentiment is still bearish after German Chancellor Angela Merkel’s opposition towards creating Eurobonds and giving more powers for the ECB to act as lender of last resort. EURUSD fell 0.4 percent to touch a new seven-week low of 1.3297.

The dollar strengthened against most major counterparts, extending this week’s gains, as investors sought the safest assets. The greenback is perceived as a safe haven in times of financial market stress because it is very liquid and is used as a global reserve currency. So investors are turning to it on concern that the euro zone debt crisis will worsen and cause global financial turmoil.

 

The dollar gained 2.8 percent against the British pound this week. GBPUSD fell to a new seven-week low of 1.5450 in Asian trading. GDP data yesterday indicated that the UK economy is still sluggish and growth will probably slow down in the fourth quarter.

 

Against the Swiss franc, the dollar rose to a high of 0.9224, gaining as much as 1.3 percent on the week.

 

Against the yen, the dollar jumped to 77.52 from the Asian open of 77.07 due to comments from Japanese Finance Minister Azumi who said that he would not hesitate to intervene again in order to curb yen strength. EURJPY was also lifted despite the broadly weak euro, but the pair took direction from the USDJPY jump and weaker yen. EURJPY rose from 102.82 to 103.23 before falling back to 102.96 as euro sentiment is predominantly bearish.

 

The Australian dollar extended losses in Asia. AUDUSD opened at 0.9727 and touched a low of 0.9682 where it found support and consolidated for the rest of the session. On the week, the commodity-linked aussie lost over 3 percent against the US dollar due to falling commodity prices and weak growth data from its major export partner, China.