A number of Asian currencies declined after dropping the most in eight months following reports indicating that the region’s economy is faltering. The ongoing debt crisis in the Euro region dampened demand for Asian exports and caused world currency market investors to favor the U.S. Dollar as a safe haven. According to official data, China’s Factory output and an inflow of foreign investments dropped more than economists had anticipated.
The Euro rebounded from a four-month low versus the U.S. Dollar as Greece’s pro-bailout party, New Democracy, made gains in the polls. The shared currency slumped versus the Yen in anticipation of the June 17th Greek election and amid high expectations for the G8 meeting which begun on Friday. Investors hope that German Chancellor Angela Merkel and other E.U. leaders will do more to stem the ongoing crisis. In the market, hedge funds and other major speculators increased speculation that the Euro will continue to depreciate versus the U.S. Dollar.
Other Forex trading news showed that the British Pound fell against the Euro after the Bank of England suggested that U.K. economic growth will remain “subdued” as the country copes with the fallout of the E.U. “storm.”
The Canadian Dollar slipped the most since November on worries that the Euro-zone situation will worsen. Also, concerns overshadowing lackluster data revealing a rise in factory sales and inflation affected the currency. The Loonie fell further versus the greenback as demand for safety rose and crude oil fell for a third week.