Forex Asia Review – Aussie hurt by soft inflation data, speculation of a rate cut

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Euro paused after a sharp decline against the dollar and struggled to make a rebound in Asian trading. The single currency was hit hard on Monday on renewed worries about the euro zone debt crisis and political uncertainty brought about by elections in France and the Netherlands. After the Dutch government collapsed over austerity measures, Holland is facing a risk of a ‘credit negative’ rating by Moody’s. Focus is also on a key bond sale in the Netherlands today.


EURUSD  traded a range in the Asian session, between 1.3144 and 1.3158. The pair had rebounded slightly in the US session after dipping to 1.3103.


GBPUSD opened in Asia at 1.6130 and traded sideways as sterling maintained strength following last week’s strong retail sales data and speculation that the Bank of England will not expand QE.


Yen extended gains due to its safe-haven status in a risk-off environment. This pushed the USDJPY further down to 80.84 from 81.17. After having pulled back to 106.79, EURJPY fell again to 106.30.


The Australian dollar fell to a two-week low against the dollar after soft inflation data bolstered expectations of more interest rate cuts by the Reserve Bank of Australia. CPI came in much lower than forecast and is now below the RBA’s target band, raining the possibility of a possible 25-50 basis point rate cut on 1 May RBA policy meeting. AUDUSD fell to 1.0246 from where it was trading before the data at 1.0323. AUDJPY was also hit hard, down from 83.780 to 82.85