EURUSD bounced off session lows of 1.3723 to rise to 1.3802 in anticipation of the key budget-confidence vote in the Italian parliament today. If Berlusconi leaves, it will bring relief in the markets and help lift euro. The Italian/German 10-year government bond yield spread hit its widest levels since 1997. Meanwhile Greece is close to naming the next Prime Minister who is replacing George Papandreou. Markets overall are upbeat and sentiment is up as European stock markets rose, with the Stoxx Europe 600 Index rebounding from a two-day decline.
GBPUSD regained losses from the previous session bouncing 0.4 percent to 1.6098 from 1.6036. The pound strengthened against most of its counterparts after data showed U.K. manufacturing production rose for the first time in four months in September, led by transport equipment and metals, beating forecasts.
The Swiss franc regained losses after falling sharply in the past two days in reaction to comments from Swiss National Bank officials that the SNB would take steps beyond the current franc cap to protect the Swiss economy if deflationary risks increase. comments from SNB vice president today dampened expectations of raising the floor on the euro/Swiss pair when he said that it would be wrong to engage in competitive devaluation. EURCHF which had gained 2.5 percent since Friday, fell today to 1.2317 from 1.2455. USDCHF fell 1.3 percent to 0.8944 from 0.9066.
USDJPY was little changed and trading sideways most of the European session but dropped drastically in the US session overlap, falling to 77.89 from the European open of 78.01, partly because of US traders repositioning as their session opened. EURJPY held firm, bouncing off the European session low of 107.04 to rise to 107.63.