Forex Asia Review – Australian dollar weakens after RBA minutes

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The Australian dollar fell against the U.S. dollar after the release today of the minutes of the Reserve Bank of Australia meeting (from August 2) which had a dovish tone and indicated policy makers were concerned over slowing global economic growth. This led to speculation that the RBA will reduce interest rates. AUDUSD fell after the new to a low of 1.0456. The pair has opened the Asian session at 1.0505.

EURUSD opened in Asia at 1.4442 after soaring in the prior U.S. session on optimism over the Franco-German summit that is scheduled for today where Merkel and Sarkozy are set to discuss the euro zone debt crisis. Consolidation into a range with the lowest point of 1.4422 ensued in very light trading. The focus will turn later to economic data which include GDP data.

GBPUSD opened in Asia at 1.6392 and edged up to 1.6404 early on residual upside momentum from the U.S session with risk sentiment still on. But this soon died out as Cable took direction from euro and with EURUSD trading mostly sideways cable eased down to 1.6356. Meanwhile, EURGBP also did little, opening at 0.8812 and remaining rangebound between 0.8805 and 0.8823.

USDJPY traded an exceptionally tight range between 76.90 and 76.80. The Japanese Obon holiday in combination with European holidays resulted in light volumes. The focus is now on the Franco-German summit later today which should create more action. However, investors are still spooked about letting yen gain too much strength after threats from Japan finance minister Noda that he will intervene in the markets.