Euro recovers from 5-week low as 10-year Italian bond yields fall below 7%
The single currency recovered from a 5-week low after the European Central Bank bought Italian and Spanish debt aggressively to push Italy's 10-year bond yields below an unsustainable 7% level and ease concerns about Italy's ability to tackle the debt crisis. However, euro fell in NY after the selloff in U.S. equities dampened risk appetite.
Although the single currency hit a fresh 5-week low at 1.3421 ahead of Asian opening, it recovered to 1.3518 ahead of European opening on short covering as investors remained cautious ahead of bond auctions by Spain and France. However, euro slipped to 1.3437 in European morning after Spanish 10-year bond yields soared to a record high in its auction, fueling concerns about debt contagion within the eurozone.
Spain's 10-year bond auction sold 3.56 billion euros at an average yield of an euro-era high at 6.98% while France's 5-year bond yields rose to 2.82% from a previous 2.31%.
Later, euro rose to an intra-day high at 1.3540 in NY morning after Italian 10-year bond yields fell below 7% and as newly appointed Italy PM Mario Monti outlined new austerity measures to restore investor confidence together with the release of better-than-expected U.S. jobless data increased risk appetite. However, price tumbled to 1.3449/50 in late NY trade after the selloff in U.S. equities dampened risk appetite.
Italian 10-year government bond yields fell below 7% to as low as 6.82% after ECB was seen aggressively purchasing Italian bonds.
In other news, Italy's PM Mario Monti said 'Italy faces serious emergency; hope government can reconcile citizens with national institutions; Europe living hardest days since WW2; can't imagine EU will survive if eurozone fails; Italy must play a part in reform of future of Europe; three pillars of policy will be budget rigor, growth, and fairness.'
US initial jobless claims fell to a 7-month low at 388K vs forecast of 395K.
Although the British pound hit a 3-week low at 1.5692 in Asian morning after U.K. consumer confidence fell to a record low, cable pared its losses and rose to 1.5793 in European morning after U.K. retail sales unexpectedly rose in Oct. before edging marginally higher to an intra-day high at 1.5913 in NY. Sterling, later fell in tandem with euro to 1.5744 ahead of NY close after the selloff in U.S. equities.
UK retail sales (Oct) were better-than-expected, increasing 0.6% m/m and 0.9% y/y vs forecasts of -0.2% and 0.0% respectively.
Versus the yen, although the greenback hit a session high at 77.09 ahead of Asian open, it fell to an intra-day low at 76.92 in European morning on cross-buying of yen (EUR/JPY fell from 104.05 to 103.48) before trading choppily in NY.
DJI closed the day down by 135 points or 1.14%.
In other news, German Chancellor Angela Merkel spoke about the eurozone crisis in Berlin and said 'crisis not over yet, we have entered a new phase of crisis; tensions between eurozone and non eurozone members of EU demand large amount of political sensitivity; even if ECB took role as lender of last resort would not immediately solve euro crisis; only political solutions can solve eurozone crisis; politicians are mistaken if they believe ECB can resolve crisis.'
On the data front, UK Nationwide consumer confidence was reported at 36 vs expectations of 43. U.S. Housing starts fell 0.3% to 0.628M in Oct, better than an expected fall to 0.610M. Philadelphia Fed survey (Nov) was worse than expected at 3.6 vs forecasts of 8.0.
The single currency recovered from a 5-week low after the European Central Bank bought Italian and Spanish debt aggressively to push Italy's 10-year bond yields below an unsustainable 7% level and ease concerns about Italy's ability to tackle the debt crisis. However, euro fell in NY after the selloff in U.S. equities dampened risk appetite.
Although the single currency hit a fresh 5-week low at 1.3421 ahead of Asian opening, it recovered to 1.3518 ahead of European opening on short covering as investors remained cautious ahead of bond auctions by Spain and France. However, euro slipped to 1.3437 in European morning after Spanish 10-year bond yields soared to a record high in its auction, fueling concerns about debt contagion within the eurozone.
Spain's 10-year bond auction sold 3.56 billion euros at an average yield of an euro-era high at 6.98% while France's 5-year bond yields rose to 2.82% from a previous 2.31%.
Later, euro rose to an intra-day high at 1.3540 in NY morning after Italian 10-year bond yields fell below 7% and as newly appointed Italy PM Mario Monti outlined new austerity measures to restore investor confidence together with the release of better-than-expected U.S. jobless data increased risk appetite. However, price tumbled to 1.3449/50 in late NY trade after the selloff in U.S. equities dampened risk appetite.
Italian 10-year government bond yields fell below 7% to as low as 6.82% after ECB was seen aggressively purchasing Italian bonds.
In other news, Italy's PM Mario Monti said 'Italy faces serious emergency; hope government can reconcile citizens with national institutions; Europe living hardest days since WW2; can't imagine EU will survive if eurozone fails; Italy must play a part in reform of future of Europe; three pillars of policy will be budget rigor, growth, and fairness.'
US initial jobless claims fell to a 7-month low at 388K vs forecast of 395K.
Although the British pound hit a 3-week low at 1.5692 in Asian morning after U.K. consumer confidence fell to a record low, cable pared its losses and rose to 1.5793 in European morning after U.K. retail sales unexpectedly rose in Oct. before edging marginally higher to an intra-day high at 1.5913 in NY. Sterling, later fell in tandem with euro to 1.5744 ahead of NY close after the selloff in U.S. equities.
UK retail sales (Oct) were better-than-expected, increasing 0.6% m/m and 0.9% y/y vs forecasts of -0.2% and 0.0% respectively.
Versus the yen, although the greenback hit a session high at 77.09 ahead of Asian open, it fell to an intra-day low at 76.92 in European morning on cross-buying of yen (EUR/JPY fell from 104.05 to 103.48) before trading choppily in NY.
DJI closed the day down by 135 points or 1.14%.
In other news, German Chancellor Angela Merkel spoke about the eurozone crisis in Berlin and said 'crisis not over yet, we have entered a new phase of crisis; tensions between eurozone and non eurozone members of EU demand large amount of political sensitivity; even if ECB took role as lender of last resort would not immediately solve euro crisis; only political solutions can solve eurozone crisis; politicians are mistaken if they believe ECB can resolve crisis.'
On the data front, UK Nationwide consumer confidence was reported at 36 vs expectations of 43. U.S. Housing starts fell 0.3% to 0.628M in Oct, better than an expected fall to 0.610M. Philadelphia Fed survey (Nov) was worse than expected at 3.6 vs forecasts of 8.0.