The single currency was rather steady in today’s Asian session, rebounding slightly from the six days trough of 1.4285 on debt worries and the latest chopping of Portugal’s credit rating by Moody’s. The concerns over the peripheral debt crisis in the Euro zone have injected Euro with excess uncertainty and skepticism, while many investors seek for less risky assets. Many depend on the ECB policy meeting and Trichet’s press conference that will take place later today. If Jean Claude Trichet will confirm the rumors for gradual tightening of the Zone’s monetary policy, this will signal negative developments for the peripheral frail economies, as the debt problems overshadow their recovery process and possible hikes will harm their debt servicing capability, while on the other hand inflation is well above the Bank’s target and requires immediate action in order for the ECB to fulfill its core mandate. Generally and on a macroeconomic view the common currency is not expected to fall sharply, since it will be well supported by the rate hikes. Throughout the Asian session Euro was moving steadily though not impressively north against the US Dollar, hitting a session high of 1.4346 at 03:00 GMT, the EURUSD pair climbed to the session high underpinned by positive Aussie economic data, a boost that arises from the positive correlation between the AUD and the EUR.
At the opening of the session the GBPUSD pair was climbing higher, gaining some 21 pips. However, the British Pound did not hold its gains and slipped against the firmer US Dollar, tracking some of the losses from the debt problems in Euro zone economies, while some others from rumors that the Bank of England will finally proceed to its decision to resume the asset purchasing program, an event which made many investors to sell the Sterling. Markets today are focusing on the BoE policy meeting which is expected to be dovish concerning inflation; any outcome other than bearish will be a surprise, as the British policymakers believe that the price pressures in the country will evaporate soon, after the effect of the hike on V.A.T will fade, remaining steady to their posture throughout 2011. Currently the GBPUSD pair is trading at 1.5971.
The USDJPY had a rather silent session initially, as from the opening to a session high at 01:00 GMT the pair fluctuated in a tight range of 12 pips. Despite the initial silence, during the second half of the session and upon the opening of the Japanese market the Dollar lost some 22 pips versus the Yen to fall to a session trough of 80,78. Currently the USDJPY pair is trading at 80.92, close to the low.
On Wednesday the Aussie was negatively affected by the third rate hike in 2011 from the Chinese central bank. China is Australia’s major trade counterparty, the vast majority of Australian commodity are consumed by the Asian giant and a rate hike is limiting the exports for Australia. However, the announcement of the positive news from the labor market the Aussie spurred gaining some 72 pips to hit a session peak of 1.0759, rebounding most of the loses from the Chinese rate hike.
Gold continues its rally this week, gaining more than 6 US Dollars per ounce in Asian trading. Debt woes in Europe and inflation concerns in China made the investors risk aversive and the precious metal more attractive. Australia is one of the biggest exporters of gold in the world and after the announcement of the positive data gold spurred to a high of USD 1531.53 an ounce. Currently gold is trading at USD 1531.03 an ounce, eyeing the session peak.