The US Dollar lost some ground in Asia today as investors continued to view the US economic situation with a leery eye. With Wall Street in the midst of earnings and the most recent data out of the US being below expectations, traders are shrugging off negative Euro news as they push the European currency to fresh two month highs. A Moody’s downgrade of Ireland’s sovereign debt was mostly dismissed yesterday as an expected adjustment to keep Moody’s in line with other rating agencies lower ratings of AA and AA- by S&P and Fitch respectively.
While the EUR/USD remained calm in its rise from 1.2930 lows, a late session break to over 1.3020 was quick and messy. The pair eventually shed those gains to retreat back near 1.2980 as the London session began. EUR/JPY pushed higher to post a big figure gain to 113.30, despite a lower Nikkei that bucked the trend of other regional indices trading in the green. After the late day surge, risk looked to be melting away. USD/JPY poked an 87.15 high with most traders putting BoJ intervention talk on the back burners at least until the pair gets closer to the 85.00 danger zone.
The big mover of the day, the AUD/USD was propelled by RBA Governor Steven’s commentary that validated that the medium term view of his economy is still healthy. AUD/USD made firm gains from 0.8670 to highs just above the 0.8810 mark due to the favorable news and a strong showing by Chinese equities.
We have a good deal of potential market moving events coming in the hours that lay ahead. The action will get underway with US building permits opening the show, followed by the Bank of Canada rate decision a half an hour later. The general consensus on the decision is that the BoC will raise rates by 0.25% to 0.75%. A failure to do so would be detrimental for the Loonie. This data will be followed by a big name day of earnings releases on Wall Street which will indeed move the dollar as traders use the data to check the pulse of the current US economic recovery. Later in the week we have the FOMC Chairman Ben Bernanke testifying as well as the long awaited European stress test results.