Forex Trading News – Risk aversion keeps yen strong; euro continues to fall on debt woes

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The euro continued its decline against the dollar in Asian trading, to touch a low of 1.3593 after opening at 1.3632. Yesterday euro lost 1.2 percent. Stubbornly high Italian and Spanish bond yields underscored the challenges facing European leaders as they struggle to contain the region’s debt crisis. Yields at a 3 billion euro five-year Italian bond sale on Monday hit euro-era highs of 6.29 percent , just a day after former European Commissioner Mario Monti was named to lead the country, a move that had been hoped would help restore investor confidence.


The yen gained against the dollar early in the session with USDJPY opening at 77.06 and dipping to 76.96 as risk aversion is favouring the safe haven asset. Then the dollar briefly spiked higher against the yen but later gave back most of its gains. Traders said the move was likely caused by a large-lot flow and stop-loss buying, and was probably not intervention.


The Australian pushed higher following minutes of the Reserve Bank of Australia’s monthly policy meeting revealed it considered leaving rates unchanged in November. Earlier in the month the RBA cut rates by 25 basis points to 4.5 percent. AUDUSD opened in Asia at 1.0203 and hit a high of 1.0225 after the minutes. The aussie then slid to 1.0159 as risk aversion in the markets due to the European debt woes weighed on risk currencies across the board, especially on commodity-linked currencies.


The Swiss franc weakened further against the dollar. USCHF rose to 0.9113 from 0.9080.


The British pound continued to slide against the dollar as GBPUSD fell to 1.5871 from 1.5910.