Forexpros – The euro fell against the dollar Wednesday as investors sold the currency on fears that upcoming bond auctions in Italy will reveal still shaky government finances despite a string of policies designed to ease the overall European crisis.
EUR/USD hit 1.3069 during early Asian trading, down 0.02%, up from a session low of 1.3063 and off from a high of 1.3074.
The pair was likely to find support at 1.3063, Wednesday’s low, and resistance at 1.3096, Friday’s high.
In Europe, policymakers and leaders have taken action to shore up the financial crisis, including pledging to better coordinate fiscal policies to European Central Bank moves that made loans more available to banks with the aim of easing tight credit conditions.
Italy is scheduled to sell EUR9 billion of 179-day bills and as much as EUR2.5 billion of zero-coupon 2013 securities later this week, according to Bloomberg.
The country will also auction debt due in 2014, 2018, 2021 and 2022.
Fears are growing that the auction will reveal eroding investor confidence in the country.
Ten-year bond yields in Italy have already advanced six basis points to 7.04% in anticipation of the auction, rising above the 7% level that prompted Greece, Ireland and Portugal to seek bailouts.
“The major theme going into 2012 is going to be the eurozone still,” Mark McCormick, a currency strategist at Brown Brothers Harriman in New York, told Bloomberg.
“There’s going to be some large bond supplies coming from some of the periphery countries, Italy and Spain in particular, and that’s going to be the focus.”
Across the Atlantic, however, the news was more positive in the U.S.
The Confidence Board reported that consumer confidence in the U.S. came to 64.5 in December, up from 55.2 in November and well above market forecasts for a 58.2 reading.
Dampening the mood in the U.S. was the S&P/Case-Shiller House Price Index, which showed home prices in a 20-city composite group fell 3.4% in October from the same month in 2010.
Markets were anticipating a 3.2% decline.
Meanwhile, the euro was up against the pound and down against the yen, with EUR/GBP gaining 0.03% to hit 0.8342 and EUR/JPY falling 0.01% to hit 101.77.
Markets are set to temper due to the proximity of the New Year holidays provided the Italian bond auction or other European events don’t roil global trading sessions.
On Wednesday, Switzerland will release its Leading Indicators Index, while in the U.S., the Mortgage Bankers Association will release its weekly mortgage applications numbers.
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