Waning enthusiasm over Italy’s better-than-expected debt auction Wednesday sent a broadly weaker EUR to its lowest level in more than a decade against the JPY, and a new 11-month low against the USD. The EUR fell as yields on Italy’s 10-year bonds perched near 7%, a psychological bulwark that had forced both Portugal and Ireland to solicit international assistance. The seemingly inexorable rise in Italian long-term interest rates raised fears that a similar fate could soon befall the euro zone’s third-largest economy, and served as a potentially ominous harbinger of Thursday’s 10-year bond auction. In US holiday trading characterized by thin and illiquid market conditions, the EUR/JPY plunged as low as 100.72, and the EUR/USD set a new 11-month low at 1.2912 before rebounding slightly. The EUR/USD was at 1.2940 late Wednesday from 1.3071 late Tuesday, the USD/JPY was at 77.94 vs 77.88, the EUR/JPY was at 100.95 vs 101.79, the GBP/USD was at 1.5447 vs 1.5673 and the USD/CHF was at 0.9427 vs 0.9342. The ICE Dollar Index was at 80.502 from 79.797. Stocks fell as the EUR/USD dropped to an 11-month low and investors fretted about Thursday’s Italian debt auction. The Dow fell 1.1% while the Nasdaq shed 1.3%. February Comex gold fell $31.40 to settle at $1,564.10 a troy ounce. February Nymex Crude settled down $1.98 at $99.36 a barrel.
EasyForexNews Research Team