Markets in Asia had light volumes due to a public holiday in Japan. USDJPY traded an extremely tight range between 83.33 – 83.48. EURJPY consolidated gains made yesterday when it rose over 100 pips to 110.54 as euro got a lift after another hurdle in the Greek debt crisis was cleared and a Greek credit default swap auction was completed successfully.
EURUSD traded sideways, slipping slightly from a one-month high on profit taking after the pair surged on Monday to 1.3264. The Greek default insurance (CDS) was paid out in line with expectations. This means the owners of Greek CDS would be paid 78.5 cents on the euro, enough to compensate for the roughly 75 percent loss investors incurred on the Greek debt restructuring. The focus will turn to German PPI data due later today, which could move euro depending on the results.
The Australian dollar slid 0.4 percent against the U.S. dollar after coming under pressure from comments by global miner BHP Billiton which said it saw signs that growth in iron ore demand was flattening in China, which is Australia’s single biggest export market. The commodity-linked aussie dollar slid down to a low of $1.0550.
GBPUSD declined on profit-taking to 1.5863 from a big spike yesterday to 1.5912. Meanwhile, EURGBP opened in Asia at 0.8329 after a sharp 60 pip gain on Monday. The pair consolidated briefly then extended its advance in Asia to a high of 0.8338.
USDCHF traded a tight range after a plummeting to 0.9090 on Monday. Dollar is weak across the board following Friday’s softer U.S. inflation data which fueled speculation that Federal Reserve will unlikely tighten monetary policy, and increases the scope of maintaining the current low interest rates. This reduces dollar demand.
Market will focus on Fed Chairman Ben Bernanke’s talks to get a clearer direction for the dollar and the U.S. economy. Bernanke gives the first of four lectures at George Washington University today and testifies before a U.S. House committee about Europe’s debt crisis on March 21.