The euro was little changed against the dollar during the Asian session as investors are waiting on the sidelines ahead of the key Spanish ten-year bond auction later today. The debt sale is considered a big test for the single currency and for market confidence in the ability of the euro zone to handle the debt crisis. Spain is the euro zone’s fourth largest economy and many are concerned over the sustainability of Spanish public finances. EURUSD opened in Asia at 1.3121 and hovered at the 1.3110 support line.
Sterling consolidated gains after a sharp advance against the dollar yesterday following a hawkish Bank of England policy report. GBPUSD traded a range of 1.6012 and 1.6034. EURGBP hovered at the nineteen-month low reached yesterday when the pair tumbled to 0.8172.
The yen remains weaker against the dollar for the third day after Bank of Japan Governor Masaaki Shirakawa said at a press conference today that the central bank is committed to continuing monetary easing. He commented that the Japanese economy has stagnated, despite trade data today showing a smaller-than-expected trade deficit. USDJPY opened at 81.27 and edged up higher to 81.53. EURJPY advanced higher to 106.98, the highest in five days.
The Australian dollar briefly jumped against the US dollar after reports said that the People’s Bank of China will increase liquidity supply by cutting bank reserve ratios. China is Australia’s major trading partner and so the aussie dollar is sensitive to any economic news from China. AUDUSD jumped from 1.0349 to 1.0385 before retreating back to previous levels.