The euro steadied in the Asian session after recording the biggest daily drop against the dollar in 15 months as a result of the surge in 10-year Italian bonds passing unsustainable levels of 7 percent. Investors are concerned Italy’s 2 trillion debt will spiral out of control as financing debt become more expensive. The EFSF rescue fund is not large enough to be able to give Italy a bailout should it come to that. Investors are waiting for the outcome of the parliament vote n austerity measures tomorrow, after which PM Silvio Berlusconi is expected to resign. After falling over 2 percent yesterday EURUSD opened in Asia at 1.3541 and traded sideways.
The yen advanced against the majority of its most-traded peers early in the session but most yen crosses including EURJPY bounced back slightly, with the exception of the USDJPY pair which continued to fall to close down at 77.71 from the 77.80 open price. EURJPY opened at 105.35 and closed at 105.20.
The Australian dollar bounced from an early session low of 1.0107 to rise against the US dollar and close up 0.3 percent higher at 1.0139. The aussie was lifted after better than expected Australian employment data showing the jobless rate declined to 5.2 percent in October from a revised 5.3 percent the previous month.
The New Zealand dollar fell against the greenback on weak domestic data. New Zealand manufacturing activity contracted for the first time in seven months in October, as consumer confidence and building earnings declined. NZDUSD fell to 77.68 from 78.10. Since yesterday, the kiwi has fallen 2.6 percent as the commodity-linked currency has been weighed down by falling commodity prices in a risk-averse environment.