BLBG:Euro Rises to Six-Week High as Italian Borrowing Costs Decline
The euro rose to the strongest level in six weeks most versus the dollar as Italian and Spanish borrowing costs fell, indicating optimism that Europe’s debt crisis is abating.
The 17-nation currency advanced to a more than three-year high versus the yen. The greenback declined versus 15 of its 16 major peers as investors bet that central banks around the world will maintain stimulus measures, bolstering demand for higher- yielding assets. The yen halted a decline versus the U.S. currency that took it to within 0.2 percent of 100 per dollar. Australia’s currency jumped to the highest since January and the New Zealand dollar strengthened to the most since August 2011.
“The euro has been cheap versus the dollar,” said Michael Sneyd, a currency strategist at BNP Paribas SA in London. “Our analysis shows it has been undervalued, relative to what has been going on in Italian and Spanish bond markets.”
The euro gained 0.5 percent to $1.3129 at 7:40 a.m. New York time after strengthening to $1.3135, the highest since Feb. 28. The 17-nation common currency advanced 0.1 percent to 130.57 yen after rising to 130.83, the most since Jan. 18, 2010. The yen strengthened 0.4 percent to 99.39 per dollar.
BNP Paribas forecasts the euro will rise to $1.35 within three months, Sneyd said.
Italy sold 4 billion euros of new 2.25 percent 2016 notes at 2.29 percent, down from the 2.48 percent on similar-maturity debt allotted on March 13, as investors shrugged off risks tied to the nation’s political crisis. Spain’s 10-year yield fell to the least since November 2010.
Australia’s dollar jumped as much as 0.4 percent to $1.0582, the strongest level since Jan. 11. The so-called kiwi surged 1.2 percent to a high of 86.76 U.S. cents.
The euro has risen 2.3 percent in the past six months, according to Bloomberg Correlation Weighted Indexes. The yen dropped 23 percent and the dollar gained 0.6 percent.
To contact the reporter on this story: Neal Armstrong in London at narmstrong8@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
