Forexpros – The euro advanced against the yen on Thursday, pulling back from a two-week low as signs of political progress in Italy and in Greece supported demand for the single currency.
EUR/JPY hit 105.98 during European afternoon trade, the daily high; the pair subsequently consolidated at 105.86, rising 0.44%.
The pair was likely to find support at 104.18, the low of October 12 and resistance at 107.68, the high of October 17.
The euro found support after Italy’s Treasury auctioned EUR5 billion of one-year government bonds at an average yield of 6.08%, the highest since September 1997, but still well below analyst expectations of 7%.
Following the auction, the yield on 10-year Italian bonds fell back below the 7% mark, a level widely considered unsustainable for continued borrowing.
Meanwhile, Italian lawmakers prepared a package of deficit reduction and economic stimulus measures demanded by the European Union, ahead of a vote this weekend.
In Greece, former European Central Bank Vice President Lucas Papademos was chosen to head the country’s new national unity government, ending three days of negotiations amid growing fears of a Greek default.
Also Thursday, in its monthly bulletin the European Central Bank halved its estimate for growth in the euro zone next year. The bank said it now expects the region’s gross domestic product to expand by just 0.8% in 2012, down from a previous forecast of 1.6%.
Elsewhere, the yen was up against the U.S. dollar with USD/JPY shedding 0.20%, to trade at 77.66.
Earlier in the day, official data showed that core machinery orders in Japan declined more-than-expected in September, falling 8.2% after a 11.0% increase the previous month.
Analysts had expected core machinery orders to fall 7.3% in September.
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