Forex Market Review – Euro rebounds on Greek debt talk progress

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Euro rose steadily against the dollar after being lifted by positive news from Europe that significant progress has been made to tackle the debt crisis. At the EU Summit, 25 of 27 EU governments clinched a deal for a closer fiscal union. Adding to sentiment were comments from Greek Prime Minister Lucas Papademos, speaking in Brussels, signalling that a deal on a second debt bailout for his country could be struck by the end of the week, citing significant progress in talks with private creditors.

EURUSD opened in Asia at 1.3142 after recovering from 1.3076 in New York and climbed higher to 1.3197.


GBPUSD tracked gains in the euro and hit a high of 1.5741 from 1.5696 in reaction to comments from Greek PM Papademos that a Greek debt swap deal was imminent.


Yen continued to gain due to end-of-month re-positioning and Japanese importer demand. Yen strengthened despite the threats of the Bank of Japan to intervene to weaken the currency. USDJPY fell to 76.16 from 76.40. Better than expected Japan manufacturing PMI data helped the yen.


The Australian dollar, which has traded in line with the euro in recent months as part of a correlation trade, gained steadily on the developments in Europe. AUDUSD rose to a high of 1.0643 from 1.0576.


Gold clawed back some losses thanks to the weaker dollar and reached a high of $ 1,738.20 from $1,728.83. Gold and the US Dollar have an inverse price relationship.