By: Barbara Zigah
In Asian trading today, the Euro retreated from the 1-week high struck following the successful bond auction conducted by the Portuguese government yesterday, even as investors await today’s auctions of Spanish and Italian debt.
As reported at 2:37 p.m. (JST) in Tokyo, the common currency traded against the U.S. Dollar at $1.3100, a fall of .24%; yesterday’s short covering sent the Euro to a high of $1.3145, well off the 4-month low of $1.2860 struck earlier in the week, and significantly above the 200-day moving average.
One forex manager in Japan suggests that the Euro could perhaps rise close to $1.33 in the short term, but cautions that the fundamentals which have been putting downward pressure on the common currency are still in place.
Recent gains in the Euro are being attributed to speculation that the Eurozone monetary policymaker’s preemptive strikes, such as the ECB’s intervention in bond auctions, sends a positive signal to investors.
Yesterday, the German Chancellor commented that her country was willing to do whatever was deemed necessary in support of the common currency, though she felt that the current IMF/EU bailout fund was sufficient. Investors continue to be concerned that Portugal, or even more worrying, Spain, will eventually have to tap into the bailout fund account, so there is little doubt that today’s Spanish auction will be keenly watched.