Strong auctions yesterday in Spain and Italy led to a welcome breather in the beleaguered sovereign debt markets yesterday which also prompted some decent short covering in EUR/USD after the very weak start to 2012. EUR/USD opened in Asia at $1.2814 after touching highs of $1.2845 in NY. Corporate demand led a small move up to $1.2826 in otherwise lackluster trade. Heavy short covering in EUR/AUD assisted the move yesterday after the cross hit all time lows of A$1.2300 before a sharp rally back to A$1.2441. AUD was capped by the cross bounce after highs of $1.0377 around midday in Europe, easing back to close at $1.0333 in NY. A further slip this morning to $1.0302 was seen on W/E squaring ahead of the Chinese New Year. Cable was sidelined in a $1.5329-43 range. EUR/GBP consolidated yesterday’s strong bounce in a stg0.8352.62 spread. JPY was a non-event again but the USD grinds lower towards supposed semi-official bids at Y76.50 as EUR/JPY rallys stall around Y98.40/50. Focus this morning will be on UK Dec PPI data at 0930GMT and EU Nov trades at 1000GMT.
EasyForexNews Research Team