The euro continued its decline against the dollar in Asian trading, to touch a fresh one-month low of 1.3433 after opening at 1.3530. Since Monday EURUSD has declined 2.7 percent as investors fear that the debt crisis is spreading to the whole continent including triple A economies like France. Bond yields in France as well as Austria have reach euro-era highs and speculation is growing that their ratings will be downgraded.
The yen was little change against the dollar in Asian trading, holding in a tight 76.96-77.14 range. Yen has been gaining strength in the past week due to its safe haven quality but the threat of a Bank of Japan intervention has kept dollar supported. Euro fell to a one-month low against the yen, weighed down with the threat of a French and Austrian sovereign ratings downgrade. EURJPY fell to 103.44, declining 3.03 percent since Monday’s high of 106.68. Meanwhile, the BoJ announced today it will leave policy unchanged and rates at lows of 0.10 percent and growth forecast is for a slightly slower pace.
The Australian dollar declined to its lowest level in a week against its US counterpart due to knock-on effects from the falling euro. European debt woes weighed on risk currencies across the board, especially on commodity-linked currencies. Tuesday’s minutes of the Reserve Bank of Australia’s monthly policy meeting revealed the central bank considers leaving rates unchanged in November, underscoring the slower growth rate in Australia. AUDUSD touched an Asian session low of 1.0059, declining 2.7 percent since Monday.
The British pound continued to slide against the dollar due to damp risk appetite in the markets as fears of debt contagion engulfing the core eurozone economies like France are scaring investors from taking on risk. GBPUSD fell to 1.5756, falling 2 percent from Monday’s high of 1.6090.
The Swiss franc weakened further against the dollar. USCHF rose five-week high of 0.9207 from the Asian open of 0.9147.