Forexpros – The euro weakened against the yen on Thursday on fears that a capital increase in the Italian banking sector came in so poorly that European governments, including France, will face demand for higher yield when they go to the bond market later this week.
EUR/JPY hit 99.19 in mid-session trading on Thursday, down 0.10% and up from a session low of 99.10 and off from a high of 99.36
The pair was likely to find support at 99.05, Wednesday’s low, and resistance at 100.30, Tuesday’s high.
In Europe, banks continue to deposit their money in the European Central Bank’s overnight deposit accounts instead of making it available for financing, which has fueled fears that the continent remains stuck in a credit crunch.
Also in Europe, Italy’s UniCredit financial institution placed a EUR7.5 billion rights issue at a steep discount, reflecting concerns that other banks will have a tough time raising capital as will sovereign countries, including the government of France, which goes to the bond market later Thursday.
“The only safe havens at the moment are the U.S. dollar and the Japanese yen,” said Callum Henderson, global head of foreign-exchange research in Singapore at Standard Chartered Plc, according to Bloomberg.
Meanwhile, the euro was lower against the pound and Swiss franc, with EUR/GBP falling 0.04% to hit 0.8282 and EUR/CHF falling 0.05% to hit 1.2181
U.S. unemployment figures will serve as a key driver for currency markets during the remainder of the week.
On Thursday, the U.S. will unveil initial jobless claims, while the ADP National Employment Report will shed some light as to the pace of hiring in the private sector.
In Europe on Thursday, eurozone industrial new orders will be released, while the U.K. is to release is Services Purchasing Managers’ Index.
The Ivey Purchasing Managers’ Index will hit the wire out of Canada, while German retail sales as well as French consumer confidence and Spanish business confidence figures.
On Friday, the U.S. Bureau of Labor Statistics will unveil its December unemployment rates.
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