Asia Session: Euro Gives Up Early Gains

The early morning embracing of risk eventually gave way to the nagging doubts that any real resolution will be produced from this weekend’s upcoming Euro Zone summit, thus enticing a sell off that continues into London. With Paris and Berlin seemingly at odds on key factors of a plan to help stem the current European debt crisis that is gripping global markets, risk sentiment melted away in Asia. The EUR/USD saw an early push over 1.3780, and once the rug was pulled out from under it, it was near the 1.3700 big figure as the London session approached. The same pattern was followed across the major currencies.

After an early run up to 1.0260, the AUD/USD was last seen near 1.0160, and the GBP/USD slipped from 1.5780 to near 1.5720 as bidders disappeared in the marketplace. The situation in the Euro Zone seems increasingly dire, and with a good deal at stake this weekend French President Sarkozy was even in Frankfurt meeting with his German counterpart while his wife gave birth to their first child back in Paris.

Yen crosses as would be expected, drifted lower as well today. The move was energized by a new program by the Japanese government that was meant to reel in a soaring yen but lacked any real teeth. The BOJ added about 10 trillion yen to their war chest used in battling a high yen. They also will create a task force to monitor the situation and will not rule out any decisive moves in the currency markets if warranted.