The Euro was holding close to a 2-week trough against the U.S. Dollar during the Asian trading session as investors’ expectations of a fruitful outcome to the E.U. summit fade. Consequently, risk averse investors have pushed the safe haven Japanese Yen sharply and broadly higher, and against the U.S. Dollar it is well off the recently struck 2-month low. As reported at 11:22 a.m. (JST) in Tokyo, the EUR/USD was trading at $1.24713 before recovering to $1.2505, nearly unchanged from late New York trade. The USD/JPY pair slipped to 79.74 Yen, falling from the 2-month peak of 80.63 Yen which was struck yesterday.
Several factors have conspired to dash investors’ collective hopes, with the most prevalent among them the reiteration of German Chancellor Angela Merkel’s position that a joint Euro bond was not a viable option at this point in time, saying it was counterproductive. Also the absence of any Greek representation at the E.U. summit is weighing on sentiment; the newly appointed Greek finance minister has resigned his position citing health issues while the Greek Prime Minister was also not in attendance having just been released from hospital. Last but not least, Spain issued a formal request for bailout assistance in order to recapitalize its banking system, with some estimates suggesting that that amount could be as much as €100 billion.