Forex Market Review 23 Jan 2012

Euro slips after Greek talks stall

The euro opened in Asia with a gap down against the US dollar in reaction to news that the Greek debt swap talks stalled over the weekend. It was hoped an agreement would be in place before eurozone finance ministers meet on Monday. The International Institute of Finance (IIF) which is negotiating on behalf of Greece’s private-sector lenders, is trying to agree on the rate of interest on the new loans. EURUSD opened the Asia session at 1.2878 compared to the New York close on Friday at 1.2928. Last week the euro gained 2 percent against the dollar on optimism that a Greek deal would be reached by the weekend.

The focus now turns to a meeting on Monday of euro zone finance ministers who will decide what terms of a Greek debt restructuring they are ready to accept in order to pave the way for a second bailout package for Athens. Once the guidance from the ministers is clear, talks on the restructuring could be finalised later in the week. Attention will also be given to the annual meeting of the World Economic Forum in Davos, Switzerland.

The U.S. dollar index, which tracks the greenback’s performance against a basket of six other currencies, rose to 80.308 from 80.148. The safe haven US dollar gained some ground against most major counterparts.

Against the Japanese yen, the dollar opened at 76.95 and rose to 77.07. Meanwhile, EURJPY opened 99.11, down from Friday’s 99.55 closing price.

The British pound dipped to 1.5526 early into Asian trading, versus the Friday high of 1.5577.

The Australian dollar failed to extend gains from last week against USD after the Australian producer price index rose only 0.3 percent in the October-to-December period versus the prior quarter, when it gained 0.6 percent. AUDUSD hit a high of 1.0492 early in the session before dipping to a low of 1.0457 then bounced back to 1.0492.

The Asian FX trading was thin with low volumes as major regional markets in Hong Kong, South Korea, Taiwan, Singapore and China were among those closed for Lunar New Year holidays.

Source: Trading-Point.com

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