Forex News Review – Swiss franc and yen stronger on safe haven demand ahead of EU Summit

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EURUSD settled into a range in a thin Asian trading session after a volatile previous day as investors are nervous about whether European leaders can resolve the euro zone debt crisis and are being cautious ahead of the EU Summit this weekend. A significant divide remains between German and French policy makers on the key issues of the structure of EFSF expansion, bank recapitalisation and haircuts on bonds. EURUSD managed to hang on to gains from the NY session, opening in Asia at 1.3713 and traded sideways to close at 1.3776. Greece passed the austerity vote late on Thursday night, which helped support euro.

 
GBPUSD mirrored movements by EURUSD. The environment was risk-off and predominantly driven by European news. Cable opened in Asia at 1.5790 and was little changed in the session as investors were reluctant to take on large positions ahead of the weekend Brussels Summit as European leaders remained deeply divided on how to tackle Europe’s debt crisis.

 

The Swiss Franc gained against the euro and the dollar as it took on safe haven status amid a risk averse market. The franc gained for a second day and was boosted by positive Swiss trade data and economic sentiment data. USDCHF opened Asia at 0.8935 and fell sharply to 8847. EURCHF tumbled to 1.2207 from the open of 1.2316.

 

USDJPY opened in Asia at 76.80 and remained under pressure, with a slight dip lower to 76.72 as yen strength reflected risk concern. EURJPY transformed into a range after euro made some gains in the previous session when European officials announced that a second summit was scheduled three days after the weekend summit in order to have more time to come up with a comprehensive debt crisis plan. Euro held on to gains after opening the Asian session at 105.83 yen.

 

AUDUSD was mostly flat after a volatile day yesterday. Until the European crisis plan takes shape and investors are reassured, investors will stay away from risk currencies like the Australian dollar. Major moves are not expected until after the Summit this weekend. AUDUSD opened in Asia at 1.0230 and traded steady until it dipped slightly to 1.0202 after disappointing Australian economic data on lower than expected import prices. The pair closed at 1.0214.