Asian markets were subdued as investors were cautious due to the ongoing European debt issues. There is uncertainty concerning the effect of the U.K.’s opposition to the accord struck at the European Union summit Friday.
Euro fell against most major counterparts in Asian trading on Monday, weighed down by a possible downgrade of euro-zone sovereign debt by Standard and Poors later today.
Despite European leaders agreeing last Friday to enforce stricter budgetary discipline across 26 of the EU’s 27 nations, details remain to be worked out, including the issue of who will get the right to supervise budgets and how penalties will be imposed if members violate the rules. Based on this, the S&P could still downgrade the euro zone and send shock waves across markets.
There is also anxiety about Italian and Spanish debt auctions this week. And the focus will also turn to the FOMC decision this week to see whether the Fed changes its view of the U.S. economy, although they expect no policy change, as recent data show firmness in the U.S. economy.
EURUSD opened in Asia at 1.3379 and fell to a low of 1.3332.
The dollar reached Y77.70 from Y77.65. USDCHF rose to 0.9276 from 0.9250. GBPUSD opened lower that Friday’s close of 1.5670, beginning the Asian session at 1.5656 and headed down to 1.5623.
The dollar is strong as it is the only viable safe-haven currency at the moment. The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 78.831 from 78.633.
Australia’s dollar declined after a report showed the nation’s trade surplus narrowed by more than economists estimated. During the session, AUDUSD fell from 1.0214 to 1.0160.