New Week Begins with Risk Off

While the week began with the EUR/USD well bid, the strength in the single European currency was fleeting, as the pair eventually made its way under 1.3400. After a close on Friday near 1.3500, the pair was boosted about 20 pips on the open due to some reassuring comments from German Chancellor Merkel earlier in the day where she stated that Germany did not want Greece to exit the Euro Zone. Be that as it may, the EUR/USD did touch an eventual 1.3550 high before risk adverse sentiment began to grow. Once the equity markets across Asia lit up red and continued lower, it was clear that traders did not have the nerve to buy risk in the face of uncertainty across Europe. Adding to the negative tone was a bunch of comments from a deputy finance minister in Germany that stated that Greece must wait until the October 3rd Euro group meeting for a decision on the next trance of EU aid. The EUR/USD than began its long descent to eventual lows just under 1.3400 to 1.3390.

The sentiment was similar throughout the FX markets today in Asia as the dollar continued to firm in the face of adversity in Europe. The AUD/USD slid from 0.9830 to .9690 while the NZD/USD dropped from .7770 to .7680, aided by very poor trade balance which came in at -641M versus -315M. Traders seem to be waiting on some kind of concrete plan out of the EU that will help solidify not only the sovereign debt issue, but investor confidence as well. With no such plan, many traders in Asia seem to be just spectators due to seemingly thinned markets to start the week.

As could be expected in this atmosphere, the yen crosses all registered big losses on the day. The EUR/JPY saw a drop of 150 pips from 103.70 highs while the AUD/JPY matched the move with its own 150 pip fall to 73.90. Looking at metals, Gold continued it’s decent from last week, dropping from $1660.00 to lows under $1595.00 while silver shed almost $2.50 to lows under $27.50. Risk is most certainly off…

Source: Forex.com

26.09.2011