The EUR was lower in Asian trade as investors were reluctant to buy the single currency despite modest gains Tuesday after successful European bond auctions, while many traders were cautious ahead of upcoming Italian and Spanish auctions and the European Central Bank’s policy-setting meeting Thursday.
Tuesday, with France and 14 other euro-zone members still under review by Standard & Poor’s Ratings, the euro was unable to hold onto its early gains as the day wore on. France’s top-notch rating is seen as key to the ability of the European Financial Stability Facility to support euro-zone members that are having trouble financing their debt.
The euro’s gradual decline during New York trading hours could herald a return to a trading pattern seen in recent weeks, where the EUR lost ground against the USD. Meanwhile, rising commodity prices boosted currencies in countries that produce raw materials, including AUD and CAD.
The next few days are also largely free of potentially market-moving events or economic data. The ECB and Bank of England will both hold meetings later in the week.The ECB is expected to leave interest rates untouched at its meeting Thursday, though analysts see it cutting rates or expanding its bond buying program later this year.
Either action would likely cause the market to sell the EUR, as they would be seen as signs that the region’s debt problems are worsening.
EasyForexNews Research Team