By FX Empire.com

The euro climbed against the US dollar on Friday as investors are closing their bearish positions in an attempt to book the profits ahead of the weakened. Data from Europe is restricted to Germany’s PPI while the US will release the leading indicators numbers for Oct.

But as investors continue to monitor the developments from Europe where the debt crisis is worsening and spreading into major economies within the euro zone area, risk aversion will continue to be present, and the single currency’s gains are unlikely to be sustained.

As Italian and Spanish bond yields are hovering near the unsustainable level of 7%, a level that forced Greece, Portugal and Ireland to seek bailouts, pressures are mounting on the ECB to start buying bonds. So pessimism might continue to weigh down on demand for higher yielding assets.

Until a solution will emerge from Europe, anxiety will continue to dominate the global markets, as the outlook of the European debt crisis is uncertain. This could increase pressures on the euro, while some countries like Australia are downgrading their growth projections for this year and next year.

Since investors are still nervous and Europe did not reach a clear resolution over its debt crisis, the higher yielding assets will remain under pressure over the coming period. As a result stocks in Europe and Asia dropped today, where the MSCI Asia Pacific Index fell 1.7%, while in Europe FTSE 100 fell 0.98%.

The US dollar is trading as of this writing around 77.95 falling from the opening at 78.31. The yen was stronger today trading around 76.73 from the opening at 76.97. The AUD managed to gain after reaching to parity with the US dollar this morning, and now is trading around 1.0062.

The euro is trading around 1.3510 compared with the opening at 1.3456. the pound is trading around 1.5850 from the opening at 1.5749. Crude oil fell below the $99.00 per barrel level as focus was back on the EU debt crisis. Gold gained slightly today as the USD is weakening, trading around $1728.66 per ounce.

Originally posted here