Ahead of holidays and the year-end, the few traders manning their desks Friday didn’t make many moves. Ten-year Italian bond yields once again climbed above 7%, helping keep the EUR in check against the USD and JPY. The common currency remains relatively range-bound just north of the psychologically important $1.30 level.
The EUR traded at $1.3045 late in New York’s trading session, from $1.3051 late Thursday, according to EBS via CQG. The common currency was at Y101.92 from Y102.01.
The biggest concern about Europe remains the ongoing debt crisis, with the most-pressing issue being whether ratings firms will take broad actions to downgrade sovereign debt in the region. Downgrades to triple-A countries such as France, the Netherlands or Germany could be devastating to the region’s bailout fund, the European Financial Stability Facility.
Earlier this month, Standard & Poor’s put nearly all the 17 countries using the euro on review for a possible downgrade. Moody’s Investors Service has said it plans to revisit the ratings of all European Union members during the first quarter of 2012 after this month’s EU summit didn’t provide a long-term solution to the crisis.
Those concerns are outweighing almost everything else in the market these days, including the successful launch of the European Central Bank’s long-term lending operation and upbeat U.S. economic data.
Speculative investors have been building up bets in recent months that the euro will fall because of the ongoing debt problems. The latest report from the Commodity Futures Trading Commission indicated anti-euro bets totaled $18.6 billion as of Tuesday, just a 2% decline from the at least four-year old record hit a week earlier.
Meanwhile, movements elsewhere in the currency market Friday were relatively tame. The USD slid against most other major currencies, except the CHF. The dollar was at Y78.11 from Y78.17. The GBP was at $1.5602 from $1.5675. The USD was at CHF0.9368 from CHF0.9360.
EasyForexNews Research Team