Forex Asia – Euro recovering after Moody’s Greece downgrade

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Euro slid in the prior US session after Moody’s downgraded Greece by three notches to Caa1 pushing it further into junk status. This pushed the Single Currency down against the US Dollar. EURUSD opened Australia/Asia at 1.4326 crawling up slowly throughout the session as sovereign buyers took the opportunity to buy on dips. The pair closed up at 1.4365 gaining some 40 pips.


Sterling was on a downtrend prior to Asian trading after being battered by lower than expected manufacturing PMI numbers suggesting the UK economy is struggling to recover, hence no rate hike in the near future. GBPUSD opened the session at 1.6334 and remained along those levels trading sideways for much of the session, as traders are on a wait-and-see mode, awaiting more data later in the data on UK construction PMI. This will determine which direction Cable will take.


The Japanese Yen was lower initially against the greenback as USDJPY rose from lows of 80.83 to highs of 81.31. A Moody’s threat of a downgrade on Japan’s bond rating kept the Yen low. However as risk aversion was back on due to concerns of the health of the global economy after a spate of weak economic data from major economies, investors returned to buying the safer Japanese currency to boost it and regain losses. The pair closed at 80.93.


The Australian Dollar was dragged down by falling commodities yesterday as concerns grew about the fate of the global economy after one of the world’s largest economies, the United States, showed signs of sluggishness on weak data. The Aussie is a commodity-linked currency and hence is affected by their prices. After sliding down to 1.0592 from 1.0751 in the prior session, AUDUSD remained on low levels throughout Asian trading, as risk-off sentiment lasted, with a brief rise to 1.0658.


Gold was raised to a new month-high in US trading yesterday after weak US economic data undermined the Dollar. Investors fled to the safe haven precious metal on concerns for the global health of the economy. Spot gold peaked at $1,550.23 then eased off as investors found an opportunity to book profits and unwind long positions. It steadied in Asian trading remaining above 1537.23 and below 1543.23. If optimism on solving the Greek crisis fades, there is speculation that gold could reach back to the May 2nd record high of $1,575.78.




(22:00 GMT)

1.4326 80.91 1.6334 1.0612 115.95 1539.53
DAY’S HIGH 1.4367 81.31 1.6315 1.0658 116.71 1543.23
DAY’S LOW 1.4306 80.83 1.6346 1.0586 115.76 1537.23

(06:00 GMT)

1.4365 80.93 1.6337 1.0623 116.26 1539.73

Note: Daylight Saving Time is in effect, add one hour to GMT