Forexpros – The euro rose to a two-day high against the yen in light trade on Monday, as a successful Italian government bond auction and hopes for fresh action by world central banks supported demand for riskier assets.
EUR/JPY hit 96.38 during European afternoon trade, the pair’s highest since August 9; the pair subsequently consolidated at 96.34, rising 0.17%.
The pair was likely to find support at 95.68, the low of August 1 and resistance at 97.80, the high of August 7.
Italy saw borrowing costs rise only slightly after it auctioned the full targeted amount of EUR8 billion of 12-month government bonds at an average yield of 1.69%, up from 1.55% previously.
Elsewhere, official data showed that Greece’s economy contracted less-than-expected in the second quarter.
Greek gross domestic product contracted by 6.2% in the three months to June, less than the 7.0% contraction forecast by economists and slightly less than the 6.5% contraction seen in the first quarter.
But sentiment on the euro remained fragile amid uncertainty over the details and timing of proposed European Central Bank bond buying, aimed at lowering Spanish and Italian borrowing costs.
Meanwhile, weak data out of Japan earlier fuelled expectations that world central banks will implement more easing measures to spur the economic recovery.
Official data showed that Japan’s economy grew just 0.3% in the three months to June, half as much as expectations for a 0.6% expansion, from an upwardly revised 1.2% in the first quarter, as export demand was hit by the debt crisis in the euro zone.
The data added to speculation that the Bank of Japan may signal the need for further monetary easing in the near future, as investors eyed the minutes of the bank’s most recent policy-setting meeting, expected on Tuesday.
Last week, the BoJ left the size of the JPY70 trillion asset purchase program unchanged and also kept interest rates unchanged at between zero and 0.1%, in a widely anticipated decision.
The yen was lower against the U.S. dollar with USD/JPY adding 0.11%, to hit 78.35.
Trade looked likely to remain subdued on Monday, with no significant economic data releases on the calendar, while volumes were light with many market participants on summer holidays.
Forexpros
