After being just shy of 1.2300 highs in New York, news of a Moody’s downgrade of Greek debt to junk status dropped the EUR/USD to 1.2220 levels heading into the Asian session. The air was able to remain buoyant near these levels, only dipping under the 1.2200 big figure briefly during the trade day. While the pair remained in a 30 pip range, the bigger news was that it was able to maintain its balance above the tricky 1.2200 level despite the bad news earlier in the day.

Equities in Asia mirrored the earlier US stock moves as they remained just over flat for the day as risk appetite took a hit from the 4 notch downgrade of Greece to Ba1 status by Moody’s. The yen firmed on the risk pull back as the AUD/JPY slipped to sub 78.20 levels and the EUR/JPY slipped under the 111.60 mark. USD/JPY tested 91.40 support but couldn’t breech it as it remained timid in a less than 30 pip range. The BOJ left rates unchanged at 0.10% as was expected, eliciting no response from the yen whatsoever.

Conversely, the Aussie dollar took a dive as the RBA minutes hinted that the rate hikes would be on hold for a while as the markets digest the current round of troubling news out of Europe. The AUD/USD dropped 40 pips to 0.8545 lows before paring losses and ending the session a bit lower for the day near 0.8560. Spot gold, XAU/USD was confined in a $4 range between $1219.00 and $1223.00 for the majority of the day. The overall tone of the day was muted with China out on its second day of its Dragon Boat Festival holiday.

The upcoming London session is littered with valuable market data including UK CPI and Inflation Report Hearings as well as German ZEW data and EU trade balance numbers.