The Euro held steady in Asian trading as investors attempt to gauge whether or not Spain is prepared to ask for financial assistance. Meanwhile, the Australian Dollar fell to a 4-week low against the U.S. Dollar following the release of unexpectedly poor trade data this morning which has raised expectations that yesterday’s rate cut by the Reserve Bank of Australia won’t be the last.
As reported at 1:00 p.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.2905, moving away from the recently struck 1-week peak of $1.2968; the pair is holding well above $1.28035, the 3-week low struck on Monday. One economist in Tokyo believes that now that the Spanish government is well positioned to ask for official financial assistance, traders won’t be too aggressive with short selling. Moody’s also announced that it was going to postpone its credit review of the fiscally troubled nation, which surprised bears who were certain that a downgrade was imminent.
In Australia, a sharp drop in prices for coal and iron ore curtailed export earnings and more than justified yesterday’s rate cut. The AUD/USD pair fell to $1.0217, close to the low struck on September 6th, and 0.4% more than yesterday’s slide triggered by the 25 basis points rate cut.