Forex News – Euro holds on to gains in Asian trading

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The euro held on to gains early in Asia after rebounding from a four-week low yesterday when markets were relieved by a successful Italian bond auction, meaning it could still raise funds on the debt markets. There appears to be some progress in filling the political leadership vacuum in the Italian government. Former European Commissioner Mario Monti has emerged as favourite to replace Italian Prime Minister Silvio Berlusconi within days and lead an emergency government. Meanwhile, in Greece, former European Central Bank Vice President Lucas Papademos was appointed to head an interim crisis cabinet in Greece. These developments were welcomed by investors and provided a turnaround in market sentiment at least for the short term. Long term euro remains vulnerable. There is still the issue of stabilizing the whole euro zone and containing the sovereign debt from spreading.

The rebound in risk sentiment kept the safe haven dollar low, knocking it down against the yen. USDJPY reached near the lowest level since the Bank of Japan intervention on October 3st. The Australian and Canadian dollars held onto gains in Asian trading.