Euro Firms after Italian Bond Auction

The Euro held steady against both the Japanese Yen and the U.S. Dollar during the Asian trading session after smooth sailing and solid demand for the Italian government’s sale of 5-year and 10-year sovereign bonds. Market players had been anxiously awaiting the outcome to gauge investor confidence after this past weekend’s Parliamentary election resulted in a political deadlock and many had expected that the bond sale would result in higher borrowing costs for Italy, a reflection of that uncertainty, as well as be an impetus for the further destabilization of the Eurozone. Given the outcome of yesterday’s debt auction, analysts believe that the Euro might be able to weather Italy’s political turmoil even if a new election appears to be in the cards.

Investor confidence also got a boost from better than expected data which showed that durable goods orders (exclusive of transport sector purchases) improved to 1.9% in January, well above an expected decline to 0.2% from 1.0% in December suggesting that businesses’ future expectations for the U.S. economy are improving.

As reported at 12:50 p.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.3147, a gain of 0.1% and well above Tuesday’s low of $1.3018. The EUR/JPY pair was 0.2% higher trading at 121.45 Yen, moving off of Monday’s multi-week low of 120.20 Japanese Yen.