The Euro took a different direction against the US Dollar in the Asian session as some investors had already speculated that Tuesday’s rise would be short-lived. The debt crisis in Europe weighs too heavily now and the fears of a Greek default are dragging down the Single Currency. At one point in the session, there were rumours that Greece will hold snap elections, which briefly helped the Single Currency but these rumours were quickly dismissed. EURUSD opened the Asian session at 1.4106, easing off yesterday’s high of 1.4132. EURUSD moved down 70 pips to lows of 1.4032, and closing at 1.4048, to test the key psychological 1.4000 support level. The focus will be on the next session to see if EUR will remain above this level.
Sterling followed a similar direction to the Euro and moved downwards against the US Dollar, opening the Asian session at 1.6979 down to lows of 1.6142 before slightly retracing on the rumours that Greece will hold snap elections. Yesterday Moody’s announced it would threaten to downgrade fourteen of the UK’s major banks, leading traders to short cover, briefly lifting the Pound, which later fell in Asian trading.
USDJPY has been range bound since Friday, opening Asian trading at 81.95 and closing at near same levels at 81.89 with highs of 82.16 and lows of 81.84. During early in the session the Japanese Trade Balance was released indicating a larger than expected imports versus exports. This helped lift the Yen briefly until it fell back after being overbought. Meanwhile, the Yen did well against the struggling Euro in Asian trading. EURJPY opened at 115.51 and closed down at 115.05.
The Australian Dollar opened Asia at 1.0557 against the US Dollar, after being given a boost in the prior US session from higher commodity prices. The Aussie is a commodity-linked currency, meaning it has a tight correlation with commodity prices, and usually mirrors them. However, the boost was short-lived and AUDUSD dropped all throughout Asian trading down 85 pips to 1.0473 just before the end of the session. Concerns about the Eurozone ongoing debt crisis had made commodity prices very volatile in the past few days. Meanwhile, some economic data released in Australia, the CB leading economic index came out weaker than expected, suggesting the economy has not fully recovered.
Gold was trading in a range in Asia after being lifted yesterday opened at 1526.28 and closed at 1524.08 to remain on high level. Gold is used as a safe haven investment to shelter from Euro debt problems after Greece was pushed further into junk status last Friday.