After having enjoyed a brief rebound off its six-month low, the Euro lost ground again in the later Asian session, under renewed pressure resulting from falling oil. Fresh risk selling brought down oil prices, which in turn dragged down the Euro. As can be seen on charts, the two have a strong correlation. As renewed concerns grow amid the Eurozone debt crisis based on the current Greek problems, investors are driven away from riskier assets. Meanwhile, the US dollar is strengthening as well, given the inverse relationship with commodities. EURUSD opened the session at 1.4237 and then it was downhill all the way, touching a low at 1.4183. .
Sterling is overall declining since May 11. It has since lost over 280 pips against the Dollar. Weak data showing UK’s Industrial Production for March came out at 0.3%, well below the expected value of 0.9%, pushed down the Pound even further in European trading on Thursday. After a slight retracement in the US session, GBP USD fell further, also dragged down by falling commodities. The pair reached a session low at 1.6238.
The Australian Dollar was pushed down lower following the slide in commodities again, especially gold, with which it has a strong correlation. The Aussie began its fall since yesterday after the release of disappointing employment data, resulting in a whole 1 cent drop. AUSUSD opened the US session at 1.0662, gradually falling to a session low of 1.0617. As the US Dollar appreciated today, investors moved away from high yielding assets such as the Australian currency and back to the greenback.
USDJPY has been trading in a range in the past three days. In the previous session the pair ticked up from a low of 80.70 up to 80.95. In the Asian session there was some volatility where there were some large spikes up and down, where 81.07 was the high and 80.47 the low. EURJPY did not break past 115.45 and was mostly a downtrend touching as low as 114.37 in the Asian session. Just two days ago, the Bank of Japan announced that it increased the country’s foreign exchange reserves to the highest amount ever, thereby reigning in the Japanese Yen’s appreciation, as more of it is being issued in the markets.
Gold did not make any significantly large movements in the Asian session, though the trend was clearly down. It opened at $1,503.43 never making it above $1,507.13 and trading along the 55 Moving Average line. Today’s stronger US Dollar capped gains in the precious metal. Gold has an inverse relationship with the Dollar. After markets open in Europe, we may gain a clearer direction as to where gold prices will head to. Gold is always considered to be a safe haven investment, so as long as there will be a crisis whether it be financial, such as the Eurozone debt crisis, or be it political, such as the upheaval in the Middle East, then demand for gold will continue.