Euro Down as Markets Eye French Auction

By: Barbara Zigah

In Asian trading, the Euro continues to hold close to multi-year lows versus the Australian Dollar and Japanese Yen as Eurozone troubles come back into focus ahead of an auction of French sovereign debt later in the trading day. Yesterday’s German bond auction resulted in a bid-to-cover ratio of 1:1.3 on the sale of €4.06 billion of the €5.0 billion offering, an improvement over last November’s disastrous bond sale but disappointing nonetheless.

France will try to raise €8 billion at their auction today, and the concern is that a less than positive outcome could renew worries of a French credit rating downgrade. On the flip side, strong response will give the Euro a boost and helping support potential short-covering.

As reported at 11:31 a.m. (JST) in Tokyo, the Euro traded against the Japanese Yen at 99.21 Yen, off an 11-year low of 98.71 Yen which was struck on Monday. Against the Australian Dollar, the Euro traded at A$1.2520, a gain of 0.3% but not too far from the record low of A$1.2469 struck yesterday. Against the U.S. Dollar the Euro was trading at $1.2927, close to the 1-week low of $1.2896; analysts say that if it breaks below $1.2856, the low of December 29th, it will take the Euro back to a level not seen in nearly 18 months.