By: Barbara Zigah

After an expected ECB decision which was followed by a disappointing press conference, the Euro took a turn for the worse and struggled to find footing in Asian trade. The Euro fell nearly 1% to a low of $1.3289 in the overnight trade, as investors reflected on the comments made by Mario Draghi, the head of the ECB, that the bank’s sovereign bond purchases were finite, and not limitless as the markets have desired. As reported at 2:14 p.m. (JST) in Tokyo, the Euro was trading at $1.3332, and market players are expected to tread cautiously in anticipation of the E.U. summit.

Early indications are that the E.U. summit will not yield desired results, as the acrimony among the government leaders remains prevalent. While it has been rumored that the French and German push for an amendment to the E.U. treaty which calls for tighter budget discipline is likely to now be accepted, other key issues including those which involve the bolstering of the emergency bailout fund, the EFSF, are less likely to be unanimously accepted.

Yesterday afternoon, after the ECB decision, several sovereign debt auctions were less successful than their respective governments would have hoped. Spanish and government bond yields jumped, as did to a lesser extent Belgian and French bonds.