Forex Asia Review – Euro climbs to fresh month high after Portugal elections

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The Euro hit a fresh one-month high against a broadly weak US Dollar in Asian trading. The markets viewed the results of the Portugal elections as positive, after centre-right Social Democrats won over the Socialists, ending months of political uncertainty after previous Prime Minister Socrates resigned at the end of March when Parliament rejected his new austerity measures to help Portugal out of debt. The Euro was already lifted to month highs on Friday by the good news that Greece will receive its next aid payment and avoid restructuring its debt. Also, the conclusion of the troika mission to put in place the second bailout plan helped lift the Euro. Meanwhile the Dollar was weakened after poor non-farm payroll data which suggested the U.S. economy is on a longer road to recovery than expected. EURUSD climbed to a new month high of 1.4656.

Sterling remained weak against the Euro in Asian trading. On Friday the Pound dropped to a four-week low against the Euro, pushed down by the stronger Single Currency which was lifted by a wave of optimism on a Greek debt solution. Interest rate differentials also lifted the Euro against the Pound, as the EU will likely raise interest rates before the UK, as there is more evidence of slow UK economic recovery. EURGBP highs today were hit a 0.8911 and lows were 0.8891. Against the greenback, the Pound extended gains against a weak Dollar. GBPUSD rose to highs of 1.6459 but later pulled back down to close at 1.6426.

The Japanese Yen extended losses against the stronger Euro in Asian trading. EURJPY rose to 117.65 from the open of 117.23. The Yen is pressured by the Euro which was boosted by positive reports on the Greek bail-out, the Social Democrat win in Portugal and general Dollar weakening due to poor US jobs data. Meanwhile, USDJPY remained close to the month lows reached on Friday after the pair fell to 80.04. Today USDJPY lows were 80.15.

The Australian dollar traded close to the three-week high reached on Friday against the US Dollar. Investors are keeping a close eye on the Reserve Bank of Australia’s interest rate meeting on Tuesday. Most economists polled by Reuters expect the central bank to keep rates unchanged at 4.75 percent for a seventh straight month. But some believe that a rate hike is possible given the central bank’s elevated forecast of underlying inflation 9-12 months forward. For today, AUSUSD is buoyed by a broadly weaker Dollar, trading at highs of 1.0765 and lows of 1.0705.

Gold edged up from Friday’s pullback to extend gains. Gold is buoyed by safe haven demand after the disappointing U.S. jobs report weakened the greenback on Friday, bringing spot gold prices up to $1,546.68. Monday’s high was close at $1,546.38.

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