The Single currency against the US dollar remains in 1.3115/1.3024 recently established tight range in the aftermath of a decline from 1.3705 towards 1.3024 in February, while in Italy the elections produced an uncertain outcome that could lead to another election in the following months. Additionally, today Italy is auctioning €4bln in 10 year bonds and €2.5bln in 5 year bonds that will test market confidence and borrowing ability for Italy, yesterday the Italian 10 year yield jumped 4.89% and Moody’s placed country’s sovereign credit rating on a negative watch.
The USDJPY corrected from highs at 94.43 to 90.93 and remained closed to downside limit, consolidating around 91.85 as Ben Bernanke stated that quantitative easing will continue at the same pace as well as saying that increased risk-taking costs do not outweigh the benefits of promoting stronger economic recovery and more rapid job-creation. Also the Yen strengthened slightly yesterday after the main opposition party in Japan reported that may not approve Iwata for BOJ deputy position, NIKKEI at the moment is losing 1.27% trading at 11,253.97.
Concerning the British pound, today a second estimate is expected for the UK’s GDP at the fourth quarter projected to remain unchanged at -0.3%. However with UK’s sovereign debt recently downgraded any negative release would refresh bearish momentum and put in test GBPUSD 1.50 handle. The EURGBP sank from cap at 0.8813 as euro weakened on Italy’s election uncertainty to 0.8575 while the British pound was in consolidation phase in the immediate trading.
Euro Weakens Due to Italy’s Elections Ahead of Bond auction, Yen Holds Its Ground
