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The euro traded higher on Tuesday morning after a fresh Italian bond auction was perceived a success, while investors awaited a decision from Europe’s financial leaders on reforms to the European Financial Stability Fund.
The single currency spiked to a session high as Italy revealed decent demand for its bonds but high yields, with three-year bond yields at 7.89 per cent and 10-year yields at 7.56 per cent. The euro rose 0.8 per cent to $1.3424 against the dollar and climbed 0.4 per cent to Y104.20 against the yen.
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Analysts said that speculators were hesitant to take further short positions on the euro ahead of any decision on Europe’s bail-out fund.
“Euro bears may also be treading cautiously on the risk that European finance ministers make some progress in tackling the debt crisis at meetings in Brussels over the next couple of days, while month-end rebalancing flows are said to favour the euro,” James Thornhill at Citi said.
The pound was up ahead of the Chancellor of the Exchequer’s autumn statement, at 12.30 GMT, which was expected to outline further measures to tackle the budget deficit.
Sterling was up 0.8 per cent to $1.5627 against the dollar.
The Australian and New Zealand dollars rallied in morning trading in London, continuing their recovery from the previous day after sharp sell-offs in the previous month. The Australian dollar rose above parity to reach $1.0038, a rise of 1.4 per cent. The New Zealand dollar rose 1.2 per cent to $0.7635.
