The euro remained weak in the European session after its sharp fall in the previous session as investors are increasingly concerned that Greece will default and that debt contagion could spread to the core euro zone economies and hurt banks since the European Finance ministers meeting in Poland over the weekend failed to come up with concrete plan to tackle the debt crisis. EURUSD has changed little throughout the session as investors are waiting in the sidelines for a conference call between Greece and its international lenders (IMF and EU) later today at 1600 GMT. The call will allow the IMF-EU inspectors to judge whether Greece is eligible for its next aid tranche due next month and will be able to communicate further on the next steps to be taken by the Greek government. A final decision will be made in October. EURUSD opened at 1.3655 and traded as low as 1.3633.
GBPUSD bounced off its eight month low from the Asian session lifted by sovereign buyers looking to profit from the lower sterling value. Cable rose to 1.5752 before falling back down to 1.5697 as gains were limited due to a broadly stronger US dollar. Meanwhile, Bank of England MPC minutes are due on Wednesday and increasing speculation that the Bank of England officials are inching toward more monetary stimulus could weaken the pound as the supply of the currency in the system will increase. EURGBP extended losses in the European session to fall to a five day low of 0.8669 dragged down by Greek default concerns.
The yen gained across the board as its demand for safe haven status increased due to uncertainty around the euro zone debt crisis after a disappointing EconFin meeting over the weekend so investors look for safety and reduce their exposure to the risk. Sterling hit its lowest against the yen in more than 2 1/2 years as investors sold risk against the safer yen as a Greek default is looming. GBPJPY fell to its weakest since January 2009, touching 120.29. EURJPY fell to 104.58 from the session open of 105.00 and USDJPY fell to 76.65 from 76.89 opening.
EURCHF remains in a holding pattern above 1.2000, which is the level introduce by the Swiss National Bank on September 6 to control franc strength. Bids managed to prop up the pair to as high as 1.2078 though was capped as Greek debt issues weigh on the euro.