WSJ:Euro Flops To Day's Lows After Weak German Auction
LONDON (Dow Jones)--The euro flopped to the day's low against the dollar Wednesday after Germany's bund auction failed to attract bids for the full EUR6 billion of paper on offer, hurting already gloomy investor sentiment.
The currency sank to $1.3397 from $1.3458 earlier after a downbeat start to the trading session due to news overnight that Franco-Belgian bank Dexia SA's (DEXB.BT) bailout deal isn't viable. The newspaper report reignited speculation that France will have to take a bigger share in saving the bank, which could pressure its credit rating.
In the morning session, Germany sold EUR3.6 billion of January 2020 bunds, despite an amount of EUR6 billion on offer, with an average yield set at 1.98%.
"I cannot recall a worse auction, only EUR3.889 billion of bids in total for a EUR6.0 billion auction, and this is the new 10-year benchmark, and that is a cover of 0.65 times," said Marc Otswald, a rate strategist at Monument Securities.
The currency was also hurt by comments from the Bank of Greece that said the country faces a real risk of exiting the euro zone and flagged the risks of an "uncontrolled downward trajectory."
At 1034 GMT, the euro was trading at $1.3377 and at CHF1.2304.
-By Eva Szalay, Dow Jones Newswires; 44 20 7842 9305; eva.szalay@dowjones.com
