The euro came under pressure on dovish comments from European Central Bank President Mario Draghi. The yen was supported by general risk off sentiment in the markets today. Safe haven gold saw another leg higher.
Japan and Australia released economic data during the Asian session. The unemployment rate in Japan held steady near its lowest level in 20 years at 2.8% in April. Retail sales rose more than expected by 3.2% year-on-year in April and were up from a prior 2.1% rise. However, overall household spending missed forecasts to fall by a larger amount in April, recording a drop of 1.4% year-on-year versus a 0.7% decline anticipated.
In Australia, attention was on building approvals data which showed that the economy was witnessing a cooling off in its biggest-ever home-building boom. Approvals for new projects fell 17.2% year-on-year in April.
In a testimony at the European Parliament yesterday, ECB President Mario Draghi said that monetary policy support is still necessary despite the resurgence in the Eurozone economy because underlying inflation pressures have remained subdued. He noted there was a lack of wage inflation, which would be insufficient to support a durable rise in the overall inflation rate.
Aside from Draghi’s dovish comments, the euro was also weighed down by Eurozone concerns such as the Greek bailout and Italian elections.
There are fears that Greece may not make its next bailout payment if creditors cannot strike a debt relief deal soon. Meanwhile, former Italian Prime Minister Matteo Renzi raised the prospect of early elections in September instead of next year.
The euro fell across the board, falling below the key 124-yen level to reach a low of 123.14, while against the dollar it fell to $1.1108.
Risk aversion boosted the safe haven yen, and consequently the dollar dropped to a low of 110.76 yen, its weakest level since May 18.
The Australian dollar was little changed against the greenback, last trading at $0.7436.
In commodities, WTI oil prices retreated from yesterday’s high of $50.26 a barrel, as concerns lingered about whether the extension of output cuts by OPEC and other producing countries will be enough to support prices.
Gold rose to its highest level since early May, reaching $1,270.34 an ounce.