Forex News Review – Euro rebounds after Italy passes austerity vote

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The euro strengthened across the board in European trading as sentiment improved slightly in anticipation of the the austerity vote in Italy on reforms outlined by the European Union. The vote was passed, and boosted euro further. This means Prime Minister Silvio Berlusconi will be stepping aside for a new unity government. Global equity markets were also up as worries over Europe’s debt crisis eased and investors showed cautious appetite for risk. In bond markets, Italy’s 10-year government bond yield continued to retreat, two days after spiking above the 7% level. EURUSD opened at 1.3619 and rose to as high as 1.3665.

 

The British pound remained weak since yesterday near three week lows, weighed down by more-than-expected falls in UK October producer prices.(leading indicator of CPI; a drop is negative for the currency). The data indicates slow growth. Yesterday the Bank of England kept rates unchanged at a record low 0.5 percent on a grim economic outlook for the UK. GBPUSD fell to a session low of 1.5894 but rebounded after the results of the Italian vote.

 

The Japanese yen edged higher against the dollar with USDJPY dropping 0.5 percent so far today since the open of the Asian session, touching a low of 77.31 from 77.67. U.S. markets are partially closed for Remembrance Day holiday today so volumes are expected to be thin. Japanese Finance Minister Azumi said today he’s on guard against speculative yen trades while declining to comment on whether the nation has been selling the currency this month. Dollar/yen dropped to the lowest since the BOJ massive yen-selling intervention on October 31. Meanwhile dollar is weakening on speculation that the U.S. Federal Reserve may eventually launch another asset-buying programme (QE3). EURJPY has been trading in a range after being lifted from a four-week low yesterday, trading between 105.35-75.

 

The Canadian dollar trimmed losses against its US counterpart as appetite and rising crude oil prices lifted the commodity-linked loonie. Crude hit its highest level in European trading today since July. USDCAD fell from an early session high of 1.0231 to 1.0177.