Forexpros – The U.S. dollar was little changed against the Swiss franc on Tuesday, after Spain and Italy saw borrowing costs rise at auctions of government debt, underlining concerns over the ongoing sovereign debt crisis in the euro zone.
USD/CHF hit 0.9622 during European morning trade, the session high; the pair subsequently consolidated at 0.9605, inching up 0.01%.
The pair was likely to find support at 0.9542, the low of June 22 and near-term resistance at 0.9628, Monday’s high and a two-week high.
Spain’s Treasury auctioned slightly more that the targeted amount of EUR 3 billion, selling EUR1.6 billion worth of three-month government bonds at an average yield of 2.36%, up sharply from 0.84% at a similar auction last month.
Spain also sold EUR1.48 billion of six-month debt at an average yield of 3.23%, up from 1.73% in May.
Following the auction, the yield on Spanish 10-year bonds rose to 6.71%, nearing the critical 7% threshold, which is widely viewed as unsustainable in the long term.
On Monday, rating’s agency Moody’s said that it had downgraded 28 Spanish banks, citing concerns over Madrid’s ability to support its banking sector, which the agency said was vulnerable to further losses from Spain’s real-estate bust.
The announcement came after Spain’s government formally requested aid of up to EUR100 billion for its banks from its euro zone partners.
Meanwhile, Italy’s Treasury sold EUR2.99 billion worth of two-year bonds at an average yield of 4.71%, the highest since December.
Investor sentiment also remained fragile amid doubts over whether an upcoming European Union summit will result in fresh measures to tackle the region’s debt crisis.
The Swissie was steady against the euro, with EUR/CHF unchanged at 1.2009.
Later Tuesday, the U.S. was to release industry data on house price inflation, as well as a report on consumer confidence.
Forexpros
