RTTN:Euro Rallies As Peripheral Borrowing Costs Ease
(RTTNews) - Euro bulls won the battle in early deals Tuesday as borrowing costs of the region's debt-striving nations eased ahead of this week's key risk-events.
Spanish borrowing costs declined notably at an auction on Tuesday, with the treasury selling bills worth EUR 3.6 billion, exceeding the EUR 2.5-EUR 3.5 billion target.
The average yield on the 3-month treasury bills was 0.946 percent, less than 2.434 percent paid at a similar auction on July 24. The rate on 6-month treasury bills fell to 2.026 percent from 3.691 percent last month.
The bid-to-cover ratio for the three-month securities was 3.35 compared with 2.94 in July. The ratio for the six- month bills, meanwhile, fell to 2.17 from 3.02. The debt agency sold EUR 1.674 billion of the 3-month paper and EUR 1.93 billion of the 6-month debt.
Also, Italy sold EUR 3 billion of 24-month zero-coupon bonds (CTZ) at an average yield of 3.064 percent, down from 4.860 percent paid at an auction on July 26. The bid-to-cover ratio was 1.95, slightly down from 1.78 in July.
Market started to speculate some concrete actions from the ECB in the coming days after its President Mario Draghi chose to stay away from this week's annual Jackson Hole Symposium in Wyoming "due to heavy workload foreseen for the next few days".
The Jackson Hole meeting is an annual affair hosted by the Kansas City Federal Reserve and is attended by officials of global central banks and economists to exchange their views.
The U.S. Federal Reserve Chairman Ben Bernanke addresses the annual symposium on Friday and the market is expecting hints on the third phase of quantitative easing.
Herman Van Rompuy, president of the European Council, is due to meet the Spanish Prime Minister Mariano Rajoy later today and is set to visit German Chancellor Angela Merkel and French President Francois Hollande in the following days.
In economic news, German consumer confidence is set to remain unchanged in September, contrary to expectations for a decline, a key survey revealed today. Market research group GfK said its consumer confidence index for September scored 5.9, unchanged from August. Economists expected the index to drop to 5.8.
The euro declined in early Asian trading after Japan downgraded its assessment of the world's third-biggest economy for the first time in 10 months, citing slowing global growth and downside risks emanating from the euro area debt crisis.
The common currency appreciated by more than 0.7 percent to a 4-day high of 1.2562 against the dollar around 5:30 am ET from early Asian session's 6-day low of 1.2466. Further buying interest could help the euro-buck pair re-test the key resistance zone of 1.2590/1.26 level.
(RTTNews) - The euro touched a 3-week high of 0.7957 against the pound around 5:35 am ET. The euro-pound pair is expected to hold gains above the 0.7965 level and the cross is hovering the neck-line of a double bottom reversal pattern in the daily chart.
Against the yen, the single currency advanced to a 4-day high of 98.85 around 6:20 am ET, up almost 1 percent from Asian session's 8-day low of 97.91. The next likely resistance level for the euro-yen pair above the key 99.0 level is visible at 99.20.
The European shared currency hardly moved out of its recent ranges against the Swiss franc, trading at a three-pip ranges between 1.2014 and 1.2011 most of the session.
The euro also outperformed against resource-linked currencies in early deals Tuesday, jumping to nearly 8-week highs of 1.2104 against the Australian dollar and 1.5559 versus the New Zealand dollar. Against the Canadian dollar, the common currency climbed to a 4-day high of 1.2426 from early Asian session's 6-day low of 1.2361.
Looking ahead, the S&P/Case-Shiller home price for June, the U.S. consumer confidence and the Richmond Fed's manufacturing index-both for August are due out in the upcoming New York session.
