Euro and most risk currencies made little progress in Asian trading, as investors proceed with caution and took the opportunity for profits after sharp rallies on Tuesday following the approval of the second Greek bailout. The focus has now shifted to Greece’s ability to restructure debt and concerns are growing about its ability to implement the austerity measures agreed upon.
The 130 billion euro rescue package has given some relief to markets since a disorderly default by Greece has been averted ahead of a March 20 bond redemption. However, the deal still faces several hurdles, including the successful completion of a bond swap offer to private creditors, as well as parliamentary approvals in Germany, Austria, Finland and the Netherlands.
EURUSD has not taken any clear direction since the deal was struck and has been trading sideways but remains above key support levels above $1.32. The pair opened in Asia at 1.3230 with highs of 1.3247 and lows of 1.3210.
The US dollar was firm against the yen, breaching the psychologically important level of 80.00 yen for the first time since August 4. The yen’s weakness is due to recent momentum to sell the Japanese currency after the Bank of Japan eased monetary policy, but also due to Japan’s record trade deficits. USDJPY peaked at 80.07 during Asian trading. EURJPY reached 105.98.
The ICE Dollar Index, which tracks the greenback against a basket of currencies, edged up slightly to 79.145 from 79.094.
The Australian dollar traded lower in Asia compared to Tuesday, reacting very little to data from its major trading partner, China. The HSBC flash PMI for China gave a slightly better reading, which showed a bounce to 49.7 in February from 48.8 the previous month. AUDUSD touched its lowest level in three weeks, reaching lows of 1.0609 before bouncing back up to where it opened the session.
Looking ahead, the market will be watching a meeting of finance officials from the G20 nations in Mexico this weekend for any further developments on international support for the euro-zone.