Forex Asia News – US Dollar hits eight-week high against the Pound

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After a large sell-off on Monday, the Euro rebounded from its two-month low against the US Dollar to close up at 1.4065. The key psychological 1.4000 level was tested but not broken, with lows almost touching it at 1.4001. Investors are still cautious and not sure if this will be a brief rebound, as the Single currency is still fragile amid the ongoing debt problems in Europe. After Greece and Italy was downgraded, Belgium was the next in line for a negative outlook by Fitch, which threatened to cut its credit rating. The fate of the Euro lies on how European policy makers will tackle Eurozone, mainly peripheral economies mounting debt before it spirals out of control. A rate hike by the European Central Bank in the near future could give a glimmer of hope to help keep the Euro from plummeting further.

The Sterling has been affected by the Euro’s woes, and almost in sympathy followed its fall. The Pound recorded a new eight-week low against the US Dollar. Since hitting a five-month high at the beginning of the month, the Pound has been sliding amid a barrage of negative economic data that suggest the British economy is not out of its slump yet. GBPUSD dropped 60 pips from the open level of 1.6120 to touch a new low since last month, reaching down to 1.6057 in the Asian session. A broadly stronger US Dollar has pushed down an already weaker Pound.

USDJPY did not record any major movements, trading in a range since last Friday. So basically any gains made in the prior session were erased in Asian trading, based on a downtrend throughout the session. After opening at 82.00, the pair dropped 25 pips down to lows of 81.75. The Yen is generally a strong currency and has been holding strong against the US Dollar even after the G7 intervention to bring it down after the massive earthquake that devastated the economy. However, with a strengthening Dollar, the Yen hasn’t been given much room to grow, and since May 5, USDJPY has been moving up.

The Australian Dollar revisited the prior session low, this time just barely above at 1.0478. Since last Friday, AUDUSD has slid over 230 pips, dragged down by sliding commodity prices which were affected by European debt concerns. An appreciating greenback held down the Aussie. The pair managed to rebound to close up at 1.0548.

Gold did not record any huge moves in the session, trading sideways but remaining around the levels it was lifted to in the prior session and kept below resistance levels of $1,517.80. The session high just barely passed it hitting $1,518.23. Lows were reached at $1,513.08. In the past week gold has been buoyed by increased demand as investors turn to the safe haven investment to shelter themselves from Eurozone debt problems.