EURUSD initially continued the descent after a huge sell-off in Asia, as euro was hurt by wider euro zone debt concerns. EURUSD fell early in the European session to 1.3361 before bouncing to a session high of 1.3541after euro was given a boost by better than expected German business confidence data which suggested Europe’s largest economy may avoid recession even as the region’s debt crisis worsens. Meanwhile, Greek Prime Minister George Papandreou is due for talks in Berlin on September 27, two days before German lawmakers vote on the enhanced EFSF European rescue fund,and there is hope he will give some optimism on progress to avert a default by Greece.
GBPUSD bounced off an early low of 1.5428 to climb to a session high of 1.5538, gaining momentum on the back of EURUSD. Gains are expected to be limited as BoE policy maker Ben Broadbent gave a dovish speech today mentioning the weak global economy is putting pressure on inflation in the UK and will further weaken the pound. Meanwhile, sterling weakened against euro, lifting the EURGBP pair from an early low of 0.8651 to peak at 0.8718.
EURJPY dropped to a ten year low as soon as the European session opened, touching 102.15 as fears of a Greek default were high and risk aversion pushed investors to the safe haven yen. Euro soon rebounded across the board, and soon regained losses against yen to climb to 103.26 as German data indicated that the euro zone’s largest economy, Germany is not heading into a recession and German Economic Research Institute’s Ifo President Hans-Werner Sinn said “The current business situation is still rather robust”. USDJPY has been range bound since last week, kept below 76.90 and above 76.10.
USDCHF trekked lower after opening Europe at 0.9136 to reach a low of 0.9005 as investors turned to the safety of the franc amid a “risk off” environment. Over the weekend G20-IMF meetings, U.S. Treasury Secretary Timothy Geithner warned that failure to combat the European debt crisis and Greek default could turn “catastrophic” for banks. Billionaire investor George Soros said “something needs to be done” to safeguard Europe’s banks because Greece may be unable to avoid default.