EUR/USD: The euro strengthened against the dollar yesterday as the currency pair opened at 1.3318, initially dipped to 1.3285 before surging up to 1.3440. The 155 pip increase was brought about after a successful Italian bond auction where they managed to raise €7.5 billion, close to their €8 billion target. The alarmingly high yields for the 3 and 10 year bonds (7.89% and 7.56% respectively) may however reignite investors’ fears as these yields are above the level that Greece, Portugal and Ireland had when they asked for their bailout packages. The currency pair slowly slipped off the high of 1.3440 back down to 1.3295 in the New York session due to the ECB’s failure to sterilize its recent bond purchase as well as the EU leaders meeting to discuss the expansion of the EFSF fund and the IMF.
