The Euro hasn’t formed any clear direction against the Dollar and almost appears to be in a range as any further advancement seems to be limited, due to doubts that a EU leaders summit on Thursday will offer a long-term solution to the Euro zone’s sovereign debt crisis. EURUSD opened Asia t 1.4152 and hit highs of 1.4175 and lows of 1.4142.
Cable mirrored the EURUSD movements as it seems to take direction from Euro when there is lack of UK economic data and fundamentals. GBPUSD opened Asia at 1.6121 and traded in a range between 1.6141 and 1.6104. The Pound is usually affected when risk aversion reigns in the markets. Currently the environment is such that investors see no reason to proactively take risks as concerns grow over both European and US debt. Later in the day MPC minutes will be released with the breakdown of the MPC members’ interest rate votes.
USDJPY showed no significant movements in Asian trading and remained in consolidation after a jump in the Dollar last night following news of a possible U.S. budget deal mentioned by Obama in a press conference. USDJPY opened the session at 79.16 and hit a high of 79.31 and low of 79.07. Recently the Japanese government has been trying to keep the Yen from appreciating further since a strong currency will have a negative impact on the still fragile Japanese economy devastated by the March earthquake.
The Australian Dollar initially rose to a high of 1.0749 against the greenback before falling to a session low of 1.0711 following the MI Leading Index release which was well below the trend. This index is designed to predict the direction of the economy in the next three to nine months. The index is based on nine economic indicators related to consumer confidence, housing, stock market prices, money supply, and interest rate spreads.
Gold prices crawled up only slightly after the big drop in the previous session following U.S. President Obama’s speech saying he supported a deficit-reduction plan proposed by the bipartisan “Group of Six” senators aimed at avoiding a U.S. default. This helped eased markets concerns over a U.S. default. Gold hit record highs on Tuesday in European trading. The precious metal is expected to remain supported though until a concrete solution to the Eurozone debt crisis is in place, as well as for the U.S. debt ceiling. Spot gold rose to $1,583.34 from the session open of $1,586.54.
Note: Daylight Saving Time is in effect for GMT