The EUR/USD enjoyed good gains on Thursday after the bond auctions went smoothly and successfully in both Spain and Italy while the ECB president Draghi said tentative signs of stability are seen.
The euro managed to gain some grounds on the steady policy from the ECB after they kept the policy unchanged and rates steady at 1.0% in a unanimous decision. The president nonetheless assured that downside risks remain amid high uncertainty yet assured that the liquidity operations are taking effect and helping stabilize the market and also downplayed the record rise in bank deposits at the ECB facility saying the three-year LTRO came at the right time and supported bank lending and transmitted into the real economy as other banks are the depositing at the ECB overnight facility and not those that applied for loans.
Draghi also refrained from any clear comments of further easing and despite his downbeat comments of the current status and the hardship overall it built-up euro gains after the successful auctions easing the woes over the outlook.
On Thursday Spain sold double its target raising 10 billion euros as costs fell while Italy also saw borrowing costs fall sharply as it raised its targeted 12 billion euros.
With the end of the week more debt sale is scheduled from Italy on Friday yet generally the tension eased after the strong demand and appetite for risk seen at the Thursday auction which also was met by a drop in yields and that will limit the scope for strong euro losses at the end of the week as the sentiment generally stabilizes.
The euro zone will start the session at 10:00 GMT with the trade balance figures for November, where the seasonally adjusted trade surplus previous reading was 0.3 billion euros, while the non-seasonally adjusted surplus was 1.1 billion euros.
TheUnited Stateswill join the session at 13:30 GMT with the import price monthly index for December, which is expected to drop by 0.1% from the previous expansion of 0.7%.
TheUnited Stateswill also provide the trade balance figures for November, where the trade deficit is expected to widen to $44.9 billion from $43.5 billion.
Auctions:
Italywill auction bonds at 10:00 GMT.
Originally posted here
