EURUSD has traded sideways after recovering from a large fall in the US session, remaining supported above 1.3890 thanks to some negative economic data from the US. Investors are reluctant to go in to new positions ahead of the EU Summit later today as a lot of uncertainty surrounds the outcome of the meeting and the ability for European leaders to reach an agreement on the firepower of the EFSF. Strong divisions between Germany and France mar any hopes of a final deal today.
GBPUSD opened in Asia at 1.5996 and rose to its highest level in over six weeks, hitting 1.6039. The pound has risen almost 2 percent against the dollar since Friday, in anticipation of a crisis plan at today’s EU Summit but sterling remains vulnerable should the Summit disappoint, it could fall hard.
USDJPY opened in Asia at 76.04 after it moved off the 75.73 record low that was reached during the US session on damp risk appetite due to euro zone crisis concerns and weak US data which all encouraged heavy selling. USDJPY was little changed in the session though with slight downside interest, as threats of a BoJ intervention from Japanese FinMin Azumi discouraged renewed aggressive selling. EURJPY has been range bound for a week, with the range tightening today between 105.72 – 106.01.
AUDUSD fell after modest consumer inflation data which fuelled speculation that the Reserve Bank of Australia could cut interest rates as soon as at next week’s policy meeting. AUDUSD fell to a low of 1.0354 from 1.0421.
NZDUSD opened the Asian session at 0.7970 and plunged to 0.7937 following data that showed business confidence continues to wane in New Zealand. Only 13 percent of businesses expect a better economy over the year ahead, down from the previous month’s 30 percent. This is the fourth successive decline in businesses’ perception of the general NZ economic environment.