EURUSD initially rose in the Asian session on news that Greek politicians agreed to form a new coalition government and Greek PM will step down, all in an effort to save the bailout deal. This knee-jerk reaction soon faded and euro weakened again as investors shifted their focus to the situation in Italy which is the fourth largest EU economy. Berlusconi is scrambling to get support at a parliamentary vote on Tuesday over public finances, seen as a test of his political strength following a humbling G20 summit where Italy agreed to the International Monetary Fund’s monitoring of promised reforms. EURUSD opened markets with a gap at 1.3828 versus Friday’s close of 1.3780 but soon declined to 1.3753.
GBPUSD opened in Asia at 1.6064 above Friday’s close of 1.1.6025 and drifted lower to a session low of 1.6004 as investors want to be cautious since Europe debt concerns are far from over with Italy taking the spot light after Greece.
The Swiss franc weakened sharply against the euro and the dollar euro after SNB President Hildebrand said on Sunday the bank is ready to take further measures to weaken the franc if economic outlook and deflationary developments make it necessary. EURCHF hit its highest level in 2 weeks, to rise to 1.2306 from 1.2266. USDCHF climbed from 0.8870 to 0.8939.
EURJPY opened higher on headline news from Europe that the Greek situation and may be under control since the political deadlock is taken care of but now the focus is on Italy as Berlusconi’s power is hanging by a thread. EURJPY opened at 108.09 and fell to 107.45. USDJPY had less action, opened at 78.16 and fell to 78.05.
AUDUSD opened in Asia at 1.0404 on initial risk appetite after events in Greece over the weekend but this optimism was short-lived and the aussie soon drifted down to 1.0342 especially after some domestic economic data showed the Australian job market may be softening, as data indicated job ads declined further in October. Last week the RBA lowered its growth outlook and warned the euro zone debt crisis was the biggest threat to the Australian economy. If conditions in Australia’s job market continues to deteriorate this will give the country’s central bank more scope to cut interest rates over coming months.