Forexpros – The U.S. dollar was mixed against its major counterparts in subdued trade on Thursday, as investors remained jittery after relatively positive U.S. data while a weak Italian debt sale continued to weigh on market sentiment.
During U.S. morning trade, the dollar was higher against the euro, with EUR/USD retreating 0.20% to hit 1.2915, trading close to a more than one-year low.
With most investors already away on year-end leave, trading volumes were thin, resulting in tight liquidity conditions and irregular volatility.
Market sentiment was hit after Italy’s Treasury sold just over EUR7 billion of long-term debt maturing between 2014 and 2022, below the maximum target of EUR8.5 billion.
The country sold EUR2.5 billion of 10-year bonds, maturing in March 2022, at an average yield of 6.97%, down from November’s euro-record high 7.56%. The country also auctioned EUR2.5 billion of three-year bonds, at an average yield of 5.62%.
Following the auction, the yield on Italy’s 10-year bonds traded at 7.1%, above the critical 7% threshold widely seen as unsustainable in the long-term.
The sale was seen as the first test of European banks’ willingness to purchase long-term sovereign debt of distressed euro zone countries, following last week’s nearly EUR500 billion cash infusion by the European Central Bank.
Investors were also cautious after the ECB said earlier that its overnight deposits receded to EUR436 billion, after hitting a record of EUR452 billion the previous day, underscoring European banks’ nervousness to lend to each other.
The greenback was also higher against the pound, with GBP/USD dropping 0.26% to hit 1.5416.
Elsewhere, the greenback was lower against the yen and but higher against the Swiss franc, with USD/JPY retreating 0.21% to hit 77.77 and USD/CHF easing up 0.04% to hit 0.9430.
The greenback was lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD falling 0.23% to hit 1.0220, AUD/USD inching up 0.04% to hit 1.0096 and NZD/USD advancing 0.10% to hit 0.7698.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.15% to hit 81.02.
Also Thursday, data showed that U.S. pending home sales rose far more-than-expected in November, surging 7.3% after a 10.3% increase the previous month.
In a separate report, research group Kingsbury International said its Chicago purchasing managers’ index dipped to 62.5 in December from a reading of 62.6 in November, which was the highest since April.
The data came after the U.S. Department of Labor said that the number of individuals filing for initial jobless benefits in the week ending December 23 rose to 381,000, disappointing expectations for a rise to 370,000.
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