And so, another day, another decline in the Euro…..Once again the Euro was under fire as traders spurned risk and looked to safety as continued pessimism over the financial situation in the Euro Zone thickened. The move by the Bank of Spain to take over the insolvent Cajasur Bank led many to believe that this move will not be the last in the fragile web of the European banking system, most notably in the South of the continent. Added to this is the fact that very harsh austerity programs that have been implemented to help the Euro Zone’s weaker members recover will ultimately quash any growth in the region. The EUR/USD was dumped from 1.2370 to 1.2285 lows in Asia, with the pair teetering on the 1.2300 big figure heading into the London session.
Overall, risk was aggressively sold as traders looked for the perceived safe havens of the US dollar and the Japanese yen. News out of the Korean peninsula helped to reaffirm the moves in risk aversion as North Korea rattled its saber and the South, firmly backed by the US planned to present its case to the UN Security Council for the implementation of sanctions against the rogue nation. As equity markets were crushed to the tune of -2.7% for the Nikkei, an over -2.0% drop for Singapore, and Korea’s Kospi collapsing over 4% on the day yen crosses followed the lead.
The EUR/JPY dropped o big figure to 110.50, GBP/JPY slid the same amount to 129.00, and the AUD/JPY fell from 74.60 to under 73.50 over the course of the session. USD/JPY was just under the 90.00 level as of this writing, down about 50 pips in Asia.
Elsewhere, the USD enjoyed not only safe haven flows, but inflows due to a recent run of solid data out of the USA. The AUD/USD was humbled at the hands of the greenback, slipping from 0.8240 to 0.8170, adding to the almost 12 big figure drop for the pair on the month. XAU/USD suffered a wave of volatility ahead of futures expirations on Friday as well as investors pulling out of the precious metal in favor of cash. Spot gold saw dynamic moves in Asia with a range between $1195.50 and $1185.00.