Forexpros – The euro fell to a one-year low against the U.S. dollar on Thursday, as investors remained cautious ahead of an Italian bond auction later in the day, despite a successful debt sale on Wednesday.
EUR/USD hit 1.2888 during late Asian trade, the pair’s lowest since January 10, 2011; the pair subsequently consolidated at 1.2937, edging down 0.03%.
The pair was likely to find support at 1.2888, Thursday’s low and resistance at 1.3049, the high of December 15.
With most investors already away on year-end leave, trading volumes were thin, resulting in tight liquidity conditions and irregular volatility.
Italy’s Treasury was to sell EUR8.5 billion of long-term Italian debt maturing between 2014 and 2022 later Thursday.
Rome sold EUR9 billion of six-month bills on Wednesday, at an average yield of 3.25%, down from a record-high 6.50% in a previous auction in November.
Following the auction, the yield on Italy’s 10-year bonds traded at 6.82%, falling slightly below the 7% threshold widely seen as unsustainable in the long-term.
But the sale failed to reassure markets as concerns over the debt crisis in the euro zone lingered after data showed earlier in the week that banks deposited a record high EUR452 billion at the European Central Bank’s overnight facility, revealing that European lenders are still unwilling to lend to each other.
Meanwhile, the euro was lower against the pound with EUR/GBP shedding 0.11%, to hit 0.8362.
Later in the day, the European Central Bank is to publish a report on M3 money supply and private lending.
In the U.S., a weekly government report is to be released on initial jobless claims, as well as industry data on pending home sales and business conditions in the Chicago area.
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