Forex Market Review – Euro rises after Italian bond auction

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EURUSD rose to the highest level this month, hitting 1.3384 in the European session after Italy held a successful government bond auction that was well received. The sale met its upper target range, with a total of 2.817 billion euros worth of bonds sold. The Spanish government also sold debt without difficulty.


Today’s advance in the euro extends Monday’s gains after Federal Reserve Chairman Ben Bernanke’s comments weakened the dollar, lifting EURUSD to 1.3366. Bernanke highlighted the ongoing weakness of the U.S. labor market, opening the door for a third round of quantitative easing, which usually weakens the dollar.


GBPUSD opened the London session at 1.5966 and extended higher to 1.5997, the highest in over four months. The rise in the British pound was mainly driven by the weakness in the dollar, rather than any U.K. specific fundamentals. Cable trimmed gains after a report showed U.K. retailers expect conditions to worsen next month.


USDCHF touched a new March low of 0.9015. The Swiss franc remained firm against the greenback as investors continue to be dollar-negative today.


USDJPY has held the same pattern since Monday, turning into a range, trading between 82.63  and 83.03 during European hours. Despite broad dollar weakness, the USD is holding up against the yen as Japanese importers took the opportunity to buy the cheaper dollar.


EURJPY is hovering near the Asian session high reached of 110.91. Euro made sharp gains yesterday on Bernanke’s comments.


AUDUSD spiked up to 1.0556 in European trading but apart from that was mostly trading in a range of 1.0502 – 1.0543. The weaker U.S. dollar has helped the commodity-linked aussie gain ground, since commodity prices were lifted. Gold, which is a major Australian export, rose to  a two-week high of $1,695.87.