ASIA SESSION: The Euro Sees a Bounce

Not surprisingly, the EUR/USD was knocked off of its perch overnight when markets realized that their expectations of a resolution to the Euro Zone debt crisis were too high for EU finance ministers to meet. After it was realized that this weekend’s summit of European leaders would offer no diminutive remedy for the regions ailments, the single currency fell from just over 1.3910 to Asian opening levels near 1.3720. The EUR/USD climbed out of that hole to see eventual highs just above 1.3780 as the day progressed, with a quick pitfall due to the release of Chinese data. While the Chinese GDP data was worse than anticipated at 9.1% versus 9.3%, it wasn’t exactly a surprise. The majors took a hit lower on the soft data, most notably the AUD/USD which shed a quick 50 pips from 1.0210 to 1.0160. The EUR/USD dipped 40 pips to 1.3745 but quickly righted its way back to previous highs just short of 1.3790.

The Aussie currency was also tethered to the RBA monetary policy meeting minutes release which showed that the RBA is not very concerned with inflation, thus adding to the speculation of a possible rate cut next month. Elsewhere, the yen crosses saw small demand despite the risk off environment and sinking equity markets which mirrored Wall Street. The EUR/JPY crawled from 105.50 to highs near 105.80, while the GBP/JPY and AUD/JPY followed suite. USD/JPY was a nonfactor, contained between 76.75 and 76.85 for the majority of the trade day.

Looking at what we have in store data wise in the London session. The UK will have both CPI and RPI data due with the GBP/USD well bid and sitting on 80 pip gains in Asia near 1.5820. As well, we’ll see German and EU ZEW economic sentiment later in the day.