The euro made modest gains on Wednesday, ahead of bond auctions by extremely indebted euro zone countries which are scheduled to start today. Portugal will be the first to tap the market today, while Spain which seeks to sell 3 billion euros worth will hold its auction tomorrow. Investors are anxious to see whether these countries can attain funding at a desirable cost or if they will be forced to turn to an EU/IMF financial bailout.
The euro remains near a 4-month low hit yesterday, despite news that Japan intends to buy around a fifth of bonds that a European rescue fund plans to sell later this month. However, remarks by Finance Minister Noda, who suggested Japan would use its euro cash holdings to buy bonds dampened expectations that this move may involve fresh buying of euros.
With more Euro Zone debt auctions being held this week concerns over demand levels and yields requested have caused the single currency to reach lows of 1.2885 up to the time of writing today - levels which were last seen in September 2010. Most of the downside was made Friday evening, and today's morning trading was rather flat ranging between 1.2885-1.2929. In the Forex markets today the US dollar lost some ground on China's recommendation to diversify FX reserves but pared back this lost ground soon after.
Friday's US payroll data was lower than had been expected although the figures were still positive, however a sharp fall in the unemployment rate from 9.8 percent to 9.4 percent saved the day and continued to give support to the US Dollar.
currency pair RTFX
's scenario for the day sees resistance in 1.2909-1.2945 for a drift lower to 1.2869, after which a bounce to 1.2985 is being anticipated. The Elliott impulse wave started on 04th January at 1.3434 has been extended lower to 1.2868.
A Portuguese bond auction is due to be held next Wednesday January 12th. With Portuguese 10-year yield currently at above 7.20 percent and with possible EU/IMF aid generally in the region of 5.5 percent asking for aid could possibly start to seem a viable option.
The euro fell to a 4-month low versus the US dollar on Friday, as optimism increased over the highly anticipated US payrolls data, which is expected to evidence a stronger US recovery in general. The euro sell-off against the greenback was also attributed to growing concerns that sovereign debt problems may spread to other euro zone countries, and a an EU proposal that may force those who lend to banks to bear big losses should they fail.
A Portuguese debt auction yesterday cost the country 3.686 percent as opposed to the 2.045 percent paid at the previous auction. Despite the higher yield there was some comfort in the fact that the bid-to-cover ratio, which measures demand, came in higher.
Data out of the United States keeps enchanting investors - yesterday's ADP National Employment report came out really strong. The Euro struggled to hold on to levels above of 1.3200 against the US Dollar yesterday. Support for the single currency continued to crumble while the US ADP report was published, the data release triggered new lows for the pair.
sees support at 1.3075/1.3001 for the
, a positive outcome for today's US weekly Jobless claims may continue to raise expectations for Friday's payrolls - and thus support for the USD may push the pair to test the 1.30 again today.
US equity close was positive yesterday and even if equity performance was mixed earlier this morning in Asia we saw the Nikkei go up by 1.44 percent as the USD made 2-week highs against the JPY and this favoured shares for Japanese exporters.
An ECB Governing Council member, Mr Mersch, encouraged governments to withdraw stimulus measures moderately but at a steady pace in order to slowly return to fiscal surpluses and thus avoid other sovereign debt crises.
The US Dollar kept finding support on the back of the recent streak of encouraging US Data. The FOMC minutes yesterday revealed no negative surprises but with payrolls due later this week investors will likely proceed with caution.
has traded in the range of 1.3258-1.3325 up to the time of writing. RTFX
's scenario for the day sees support holding at 1.3255 than a correction higher to 1.3486 is anticipated - unless 1.3203 is significantly breached than the pair would remain bearish.
The AUD kept losing ground, after failing to enjoy the benefits of increased risk appetite earlier this week on concerns over the Flood damage, a correction in commodity prices kept pressuring the Aussie. Profit taking hit commodities as the International Energy Agency (IEA) warned that oil prices have reached a "danger zone". Gold and silver suffered a significant correction lower yesterday afternoon but remained rather flat up to this morning.