Forex – Asian markets cautious on Greek situation; yen advances on safe haven demand

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EURUSD regained some losses in the Asian session in a corrective movement after a huge fall yesterday on news that Greek PM wants to hold a referendum on the Greek debt deal. Late yesterday it was confirmed that PM Papandreou received unanimous backing from his Cabinet to go ahead with the referendum. Also today there will be a vote of confidence for the Greek PM in Parliament that will conclude by the end of the week. Papandreou is heading to Cannes to meet German Chancellor Angela Merkel, French President Nicolas Sarkozy, European Central Bank President Mario Draghi to discuss developments in Greece. EURUSD rose from a low of 1.3634 to a high of 1.3730.


GBPUSD opened in Asia at 1.5946 and mirrored EURUSD movements by recovering from the big fall to 1.5983.


The yen advanced against most of its major counterparts as renewed speculation Europe’s debt crisis is worsening and boosted appetite for the safe haven yen. Despite the recent Bank of Japan intervention to weaken yen, it has proven difficult for the Japanese currency to stay low in such an uncertain environment where investors are not keen to invest in risky currencies and prefer safe haven assets. USDJPY fell to 78.10 from 78.38.EURJPY fell early in the Asian session from 107.36 to 106.80.


AUDUSD opened in Asia at 1.0328 and tumbled to 1.0279 on damp risk sentiment due to the turmoil in Europe and Greece. The Australian dollar was also hurt due to the Reserve Bank of Australia cutting its benchmark interest rate by 25 basis points to 4.5 percent yesterday and signalled more cuts. Weak economic data on housing did not help the aussie. Meanwhile the focus will be on the US Fed policy meeting today to signal whether the US economy is faltering or not. This will affect market sentiment.