The euro reversed to the downside after opening the Asian session, cutting some of the huge gains recorded in the past session, where the U.S. dollar rebounded to the upside as pessimism returned to dominate the market, awaiting the critical vote from the Slovak Parliament today in addition to the joint statement from international lenders' auditors.
Slovakia, the poorest country in the euro zone, could reject the expanded powers of the European Financial Stability Facility as speculations in the market indicated, where the agreement on July 21 included that all of the euro zone members' parliaments should grant a vote of confidence in order to implement the expansion of the rescue funds, which forced downside pressures on the euro and supported demand for the low yielding currency, the U.S. dollar, as investors tend to avert risky investments.
The EUR/USD pair opened the session in Asia at 1.3641, and recorded the highest at 1.3672 and the lowest at 1.3577, and is trading now around 1.3599.
Moreover, and as Europe remains the main focus in the market, European leaders attempt to secure the European banking sector from a Greek default, in the time governments delayed the European leaders' summit to October 23 as they needed more time to come up with a new plan to overcome the debt crisis once and for all.
The main reasons to delay the summit was the rising opposition to Germany, where Merkel demanded private investors to bare more, as Luxembourg's Jean-Claude Juncker says write-downs could exceed 60%, while International Lenders are waiting the joint report from inspectors in Greece. All these factors together raise doubts on the ability of leaders to agree on a plan to overcome the debt crisis once and for all, which reflected negativity on the euro to trade lower today against the U.S. dollar.
The U.S. dollar index (USDIX) opened at 77.56, and set the highest at 77.88 and the lowest at 77.48, and is currently trading around 77.80.
Furthermore, Trichet told lawmakers as the European Systemic Risk Board's leader that in Europe the crisis has reached a systemic dimension, and added Sovereign stress has moved from smaller economies to some of the larger countries. The crisis is systemic and must be tackled decisively.
Regarding the sterling pound, the pair retreated against the dollar and the euro after the industrial and manufacturing production figures, where on the one hand the industrial production expanded in August by 0.2% from a previous drop of 0.4%, but on the other hand the manufacturing production, which represents the largest and the most important part of the industrial sector, dropped further in August by 0.3% form the previous 0.2%, confirming the sluggish growth in the Kingdom.
Concerning the GBP/USD pair, the sterling pound slipped against the U.S. dollar after the news to a low of 1.5610, noting that the pair opened the session at 1.5666 and reached a high of 1.5668, and is currently hovering around 1.5641.