Euro extended losses to fall to a new four-month low against the dollar in the US trading session, weighed down by the political stalemate in Greece and the country’s possible exit from the euro. Soft economic data showing a drop in industrial production in the euro zone also weighed on the euro, as well as rising yields in Spain and Italy. EURUSD declined by 0.5 percent to reach a trough of 1.2824, the lowest level since January 18.
Sterling gained momentum against the dollar and the euro during the US session, taking on the role of a safe haven asset. GBPUSD moved off three-month lows and opened the session at 1.6060 to edge up to a high of 1.6122. EURGBP extended its decline to 0.7962, marking a new 3-1/2 year low.
Yen gained strength due to safe haven flows, causing concern to Bank of Japan officials. However, intervention in the currency markets is not expected at this time. USDJPY fell to as low as 79.67 in mid-US session trading from an earlier 80.17 high. EURJPY fell 1 percent to a low of 102.21 from an earlier Europe session high of 103.29.
The Australian dollar fell below parity against the greenback as a result of continued risk aversion that is weighing on the commodity-linked currencies. Soft Chinese data is also weighing on the aussie since China is a major trading partner. Focus is on Tuesday’s Reserve Bank of Australia monetary policy meeting minutes which will give a better idea of the near term outlook for monetary policy and whether the RBA would cut rates in the near term. AUDUSD fell to 0.9957, the lowest since December 2011.
The Canadian dollar lost all gains made on Friday following an improved jobs report. The commodity-linked loonie fell in line with commodity prices, especially crude oil, which is a major Canadian export. USDCAD rose to 1.0050, close to a four-month high reached last week.
Crude oil is down US$12 a barrel since the beginning of May, touching US$94.05 today.