EURUSD hit a seven-week high in the Asian session after EU leaders and banks reached a deal on a 50 percent writedown for private bondholders on their Greek debt. Also progress was made in negotiations on bank recapitalisation and measures to scale up the size of the euro zone’s 440 billion EFSF euro rescue fund to as much as 1 trillion euros. Details of a “comprehensive plan” will be revealed in November before the G20 Summit. EURUSD jumped 0.6 percent to 1.3994 from the Asian open of 1.3903.
GBPUSD opened in Asia at 1.5976 and climbed near to a seven-week high, hitting 1.6034 as risk appetite increased after a successful conclusion of the EU Summit with satisfactory agreements made on Greek bond “haircuts”. EURGBP rose to 0.8732 from a low of 0.8688.
USDJPY opened in Asia at 76.19 and dropped sharply to 75.98 on a broad dollar sell-off due to speculation that the Fed will launch another round of quantitative easing by next week. Meanwhile, the Bank of Japan kept its interest rates on hold at 0-0.1 percent and also announced plans to introduce policy easing and increase its asset purchase program by 5 trillion yen in an effort to cap yen strength. This initially pushed USDJPY to spike up to 76.25 but proved short-lived and yen regained strength again as dollar plunged to 75.93 yen.
AUDUSD jumped by 1 percent to hit a seven-week high of 1.0499 from the Asian open of 1.0394. The successful EU Summit and agreement on Greek debt haircuts and EFSF expansion sparked a relief rally across riskier assets.
NZDUSD rose by 0.6 percent after having fallen for the past two days. The pair opened the Asian session at 0.8007 and hit a high of 0.8056. The so-called kiwi dollar strengthened after Reserve Bank of New Zealand Governor Alan Bollard said in a statement that “gradually increasing pressure on domestic resources will require future official cash rate increases.” The central bank left its benchmark interest rate at record low of 2.5 percent today.