The euro rose from a four week low today as yields on 10-year Italian government bonds have eased from record highs amid speculation that the European Central Bank is buying Italian bonds and helped in the success of today’s bond auction where Italy met their target bond sale of 5 billion euros. Investors monitored events in Italy, where an economic bill under consideration would help stem the government’s borrowing costs and pave the way for Prime Minister Silvio Berlusconi to resign. Meanwhile good news came out of Greece, where Lucas Papademos was named new prime minister, replacing George Papandreou after four days of deadlock. EURUSD was lifted to a day high of 1.3652 where it settled into a range for the rest of the US session. The euro will likely remain under pressure as uncertainty remains over the selection of a new leader in Italy to replace Berlusconi and whether the new government can implement the new austerity measures.
The British pound pared gains made from the announcement that the Bank of England kept rates unchanged. In the US session, sterling slid against the dollar after better than expected US jobs data lifted the greenback. A report showed the number of Americans filing applications for unemployment benefits fell to the lowest level in seven months. GBPUSD see sawed from a high of 1.5984 down to 1.5867 after the US jobs data then bounced again.
The yen strengthened initially against the dollar but then USDJPY bounced back from a US session low of 77.49 to 77.72. The yen weakened against the euro today as the single currency rose across the board on improved risk appetite. EURJPY bounced from a low of 104.71 to as high as 105.96.
The Canadian dollar strengthened against its US counterpart after Canada posted a better than expected trade surplus in September. An overall improved sentiment with gains in equity markets and elevated crude oil prices helped lift the loonie which is a commodity-linked currency due to the fact that Canada produces and exports oil. A surge in oil exports helped the trade surplus grow to C$1.246 billion in September, the most since January. The Canadian dollar gained 1 percent on the day against the greenback. USDCAD touched lows of 1.0163 versus a high of 1.0265.
Higher- yielding currencies including Brazil’s real and Norway’s krone rose against the dollar
Gold dipped as the dollar strengthened (the two are inversely correlated). Spot gold fell from a high of $1,775.28 to $1,735.80.
Crude oil hit a four month high at US$98.33, rising from US$95.19.