The euro hovered around five-week lows against the dollar following the Spanish bond auction where 10-year bonds reached euro-era highs of 6.975 percent. Also, French and German yields also rose higher. This fuelled concerns about debt contagion and drove investors away from risk. EURUSD has been mostly range bound since yesterday but fell to as low as 1.3436 after the bond sale versus the European open of 1.3507 before rebounding. Euro was supported by positive US data that was released towards the end of the European trading session. Risk sentiment was boosted by higher US housing starts and lower jobless claims.
The British pound jumped over 50 pips versus the dollar after unexpectedly strong UK retail sales data boosted sentiment. GBPUSD spiked to 1.5790 from 1.5736 after data showed retail sales rose 0.6 percent in October beating predictions of a fall of 0.2 percent. Cable remained near the high though in a choppy trade as the results of the Spanish debt auction and investor concern on the euro zone debt crisis kept them cautious.
The Swiss franc weakened to its lowest level in a month against the US dollar in early European trade. USDCHF rose 0.5 percent to hit a session high of 0.9235. Escalating euro zone problems pushed investors towards the safe haven U.S. currency instead of the Swiss franc because there is speculation that the Swiss National Bank could resume intervention to stem strength in the franc. In September the SNB placed a floor of 1.20 francs to the euro. So far EURCHF has remained well above that floor and hit 1.2439 today. Also data showed today that economic expectations for Switzerland decreased in November 2011 accoring to the relevant ZEW-CS-Indicator which dropped by 9.9 points to minus 64.3 from minus 54.4.
The Japanese yen remained strong against most of its major counterparts as its safe haven status is boosted by euro zone debt concerns. EURJPY dropped near the month-low to touch 103.60 from the Europe open of 103.97. However euro made up for losses and climbed to 104.06 tracking gains in EURUSD following the disappointing US housing and jobs data.