Forexpros – The euro was down for a second day against the yen on Thursday, trading at a fresh 10-year low after an auction of long-term Italian government debt failed to ease concerns over the fiscal health of the euro zone’s third largest economy.
EUR/JPY hit 100.34 during European morning trade, the pair’s lowest since June 5, 2001; the pair subsequently consolidated at 100.43, shedding 0.42%.
The pair was likely to find support at 99.87, the low of June 1, 2001 and resistance at 101.79, the previous day’s high.
With most investors already away on year-end leave, trading volumes were thin, resulting in tight liquidity conditions and irregular volatility.
The euro came under selling pressure after following a disappointing auction of Italian government debt earlier in the day.
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 auction 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.
The yen was also higher against the U.S. dollar with USD/JPY easing down 0.1%, to trade at 77.85.
Later in the day, the U.S. was to release a weekly government report on initial jobless claims, as well as industry data on pending home sales and business conditions in the Chicago area.
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