The Euro initially continued to advance in early Asian trading after previously being lifted by a comment from the chief of the European Financial Stability Facility that the bailout fund’s guarantees will be raised to 780 billion Euro from the 440 billion. EURUSD soon lost momentum, its further rise stalled ahead of a confidence vote on the government in the Greek parliament later today. At the moment any rise in the Single Currency is driven by short-term players, very few are holding it for the long term. Meanwhile, Fitch Ratings said it would regard both a Greece sovereign debt swap and a rollover of maturities, even a voluntary one, as default which further dented the Euro. EURUSD rose to a session high of 1.4383 before dipping to lows of 1.4305.
Sterling retraced after reaching a new five day high. UK economic data due out later this morning on Net public sector borrowing are widely expected to add to the gloom over the UK budget deficit, which could drag down the Pound again. GBPUSD climbed all the way up to 1.6252 then fell to close at 1.6210.
Then Yen was lifted against the Dollar after Japanese Finance Minister Yoshihiko Noda said he is closely watching the currency market and the authorities would take firm steps against excessive and disorderly moves. The pair is mostly affected by US fundamentals such as the delayed US recovery. The markets are anticipating continued monetary easing by the Federal Reserve and this is helping support the Yen against the greenback. USDJPY fell from highs of 80.33 to session lows of 80.08.
The Australian dollar sharply after the minutes of the Reserve Bank of Australia’s June meeting today showed the bank thinks recent data has not added any urgency to the need for tightening. Also Fitch said it would regard a debt exchange or a voluntary rollover of Greek bonds as a default so this boosted risk aversion. AUDUSD initially gained by rising to 1.0615 and soon fell to 1.0531.
Gold stabilized near its highest level in two weeks reached yesterday, lifted by the ongoing Greek debt issues that seem to have no quick end in sight. Meanwhile, gold will most likely stall at these levels as markets take a wait and see approach ahead of the much anticipated US Federal Open Market Committee meeting this week. Spot gold traded between $1,542.25 and $1,538.38.
Note: Daylight Saving Time is in effect for GMT