The Euro extended losses against the US Dollar from Friday, dropping from highs of 1.4145 to lows of 1.4063. EURUSD has been sliding since its 5-month high against the US Dollar on May 5, shedding over 800 pips. Fitch ratings last Friday downgraded Greece’s long-term debt rating to four levels below investment grade, fueling concerns that Greece could default soon, causing a sell-off in the Single Currency. There is possibility for the pair to break past the critical psychological 1.4000 support level. What will prevent this from happening is speculation that the European Central Bank will raise interest rates again in the near future.
Meanwhile, the US Dollar is broadly higher today, hitting a seven-week high against most major counterparts. GBPUSD extended losses from Friday, losing another 30 pips, from the open level of 1.6222 down to lows of 1.6194.
USDJPY rose in Asian trading, breaking out of the range it was trading in on Friday, opening at 81.77, to peak at 82.01 and closing the session at 81.90. However, the Japanese Yen made slight gains against the struggling Euro, with EURJPY dropping from highs of 115.61 down to lows of 115.05.
The Australian Dollar opened the new trading week with a gap, opening lower against the greenback at 1.0640. AUDUSD slid over 80 pips during the Asian session, from highs of 1.0655 to continuously drop down to lows of 1.0559. Concerns about the Eurozone ongoing debt crisis dragged down commodities today, and as the AUD is a commodity-linked currency, meaning it has a tight correlation with commodity prices, and usually mirrors them. Meanwhile, the Aussie is also sometimes affected by the economic situation of China, as it is a major trading partner. So the HSBC Flash China Manufacturing PMI released today indicated a slowdown in economic growth led to selling of the Aussie Dollar.
Gold was buoyed last Friday by increased demand as investors turn to the safe haven investment to shelter themselves from Euro debt problems after Greece was pushed further into junk status last Friday. Gold is a good hedge against a weakening currency, the Euro in this case. Spot gold reached near two-week highs just before the end of trading on Friday. The precious metal remained on those high levels throughout the Asian session, spiking to as high as $1,518.51, remaining above the Fibonacci 23.6 support level of $1,508. However, gold that is priced in US Dollars will soon drop in demand based on a strengthening greenback recently, resulting in gold becoming more expensive to buy. Spot gold priced in USD closed lower at $1,511.23, whereas spot gold priced in Euros was up.