Most Asian markets were closed with the Lunar New holiday shutting financial centers in China, Japan, Hong Kong, Singapore and South Korea. Trading was light and volatile. Australian shares were flat after closing on 34-month high on Friday following positive export figures from China. Brent crude oil which touched its highest in nine months on Friday, remained unchanged just below USD 119 a barrel.
Foreign exchange trading was choppy with thin volumes. Traders interpreted this as a result of last week’s slightly dovish comments from the European Central Bank (ECB). The President of ECB, Mario Draghi, indirectly warning against that the raising strength of Euro may hurt economic development inside the euro zone. Euro/USD fell briefly to 1.3325 Monday morning and is now trading at 1.3375. The Japanese yen is also strengthened both against Euro and USD. USD/JPY trades at 92,25.
The Euro has also weakened on the cash payment scandal in Spain which engulfs the Prime Minister. Confidence in Italy is also shaken prior to the February 24-25 elections. The worries on the euro zone debt crisis and uncertainties in the southern periphery of Europe is back on the agenda. This probably means that the upside of the Euro is likely to be short-lived and limited.
European Economic and Monetary Affairs Commissioner Olli Rehn said in an interview during the weekend that EU wants closer coordination on currencies to avoid potential damaging disruptions to world trade. The remarks came amid a standoff between France and Germany over whether a strengthened Euro needs an official EU- response or should be left to the currency markets.
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