Euro Retreats Ahead of Debt Auctions

By: Barbara Zigah

The Euro slipped off a 2-week peak versus the U.S. Dollar, pushed there on news that the IMF has decided to increase its safety net intended for the Eurozone by 100%. The Euro’s gains were already said to be limited for various reasons, including the upcoming sovereign debt auction for Italy, primarily, and the Netherlands as well; resistance is likely seen at around $1.3375.

As reported at 12:59 p.m. (JST) in Tokyo the Euro was trading at $1.3189, off of last Friday’s high of $1.3225. What is also weighing on the Euro is news that French President Nicholas Sarkozy with nearly 95% of the votes counted, appears to have lost a preliminary challenge to his presidency to an opponent who it is believed will not support austerity as a means to balance the budget.

The Australian Dollar is also retreating following economic data which reinforces expectations that the RBA will be cutting interest rates next week; the AUD/USD slipped 0.4% to $1.0340, holding within the relatively tight trading band of last week. On a quarter-over-quarter basis, the Australian PPI slipped in the first quarter to -0.3%, well below expectations of a rise to 0.4% while on an annualized basis it fell to 1.4%, again below the consensus estimate of 2.2%.