The euro climbed higher against the US dollar, gaining 1.25 percent on the day so far. Italian and Spanish bond yields moved lower today following purchases by the European Central Bank. This helped ease worries by investors that the euro zone debt situation will spiral out of control. The 10-year Italian bond yield fell below the crucial 7 percent mark hit earlier this week and sent euro tumbling. Spanish bond yields also eased lower. As a result risk appetite improved and helped lift the euro to a high of 1.3613 in the European session.
Sterling climbed 1 percent against the US dollar on the day to reach a 3-day high of $1.5887, tracking gains in EURUSD and improved risk appetite. The pound is still vulnerable though as the Bank of England may expand quantitative easing again which will weaken the currency. In a Financial Times article today, BoE policy maker Martin Weale said that the BoE may need to extend its money printing operations next year unless the economic outlook in the UK improves.
The Canadian dollar rallied against the US dollar for the first time in five days after Canadian consumer prices rose more than forecast in October showing some sign of improved economic activity, This reduced speculation the Bank of Canada will cut interest rates. Consumer prices rose 0.2 percent in October, beating forecasts of a 0.1 percent increase but unchanged from the previous month. Meanwhile a slightly improved risk sentiment and a rebound in crude oil prices helped lift the loonie 1 percent from a month low against the greenback. USDCAD fell from 1.0298 to 1.0198.
The yen continued to gain against the US dollar despite risk of a Bank of Japan intervention to curb yen strength. USDJPY fell 0.6 percent on the day to 76.56 from the Asian high of 77.02. This is the lowest level since the October 31 BoJ intervention. Meanwhile euro extended gains against the yen to rise to 104.27 from 103.51. This was due to ECB buying bonds today and lifting the euro across the board today.