The US dollar strengthened against most counterparts in the Asian session due to damp risk sentiment. Debt issues in both the United States and Europe are pushing investors to the safe haven greenback.
The dollar briefly spiked against the yen then fell again after confusion was caused regarding whether the Bank of Japan would resort to direct purchases of foreign currency-denominated bonds in the amount of 50 trillion yen as a form of “intervention” to curb yen strength. But Japanese Finance Minister Jun Azumi soon dismissed this proposal. USDJPY jumped to 77.31 from 76.84.
The euro was mostly steady in Asian and was little changed. EURUSD opened at 1.3487 with a slight dip to 1.3468 then bounced back to 1.3490. After big losses on Monday, the euro revered course by late North American trading in reaction to news that Greece will be receiving its 6th aid trance worth 8 billion euros. The president of the European Council, Herman Van Rompuy, confirmed that the next instalment is due in November. The focus will be on today’s bond sale in Spain. The euro may fall again if an auction of Spanish bonds meets poor demand.
The Australian dollar bore the brunt of the market’s fears, being a commodity-linked currency. AUDUSD opened in Asia at 0.9838 after a huge sell off on Monday on increased risk-off sentiment and remained weak in the Asian session. The aussie was the worst performing currency Monday due to sizeable declines in both stocks and commodities.
Gold fell due to the stronger dollar. The two have an inverse relationship since gold is priced in US dollar. Gold hovered around a four week low, trading at $1,668 in Asia.