EURUSD opened Asia at 1.3346 and dipped to a session low of 1.3259 after euro was hurt from Moody’s downgrade of Italy’s credit rating by three levels from Aa2 to A2 with a negative outlook. This follows from Standard & Poor’s downgrade on September 20. No concrete measures have been resolved by the EcoFin meeting this week and the region’s debt crisis is hampering growth. This will likely pressure the European Central Bank to even cut interest rates at its policy meeting tomorrow.
GBPUSD opened in Asia at 1.5476 and headed down to 1.5407 trimming gains made in the previous US session where the pair had peaked to 1.5490. Cable mostly took direction from the EURUSD pair whose flows were dominated by Italy’s downgrade. The focus will turn to Thursday’s Bank of England policy meeting as speculation is growing that the bank will introduce more easing.
AUDUSD opened in Asia at 0.9564 after spiking to 0.9595 in the US trading session. The risk sensitive Australian dollar pared some gains after news of Moody’s downgrade of Italy and dipped to 0.9487. A further fall was halted by much better than forecast Australian retail sales which grew 0.6 percent in September. 0.3 percent was expected.
USDJPY opened Asia at 76.78 after peaking at 76.97 in the US session following US Fed Chairman Ben Bernanke’s comments that signaled there could be more stimulus and easing to support the US economy. USDJPY changed direction down to 76.60 after Moody’s announced its downgrade of Italy. EURJPY fell from 102.47 to 101.60.