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Euro Volatility Expected Following Spanish Auction
Submitted by Forexyard on Thu, 07/06/2012 - 10:57
While the euro was able to largely maintain gains from earlier in the week against the USD and JPY during trading yesterday, the common-currency took losses against both the AUD and GBP. The EUR/AUD began falling during the overnight session, after positive news boosted investor confidence in the Australian economy.
The pair eventually dropped over 120 pips, reaching as low as 1.2613 before staging a slight upward correction. Against the GBP, the euro fell close to 60 pips, reaching as low as 0.8049, before staging an upward correction and stabilizing at 0.8077.
Today, all eyes are likely to be on the Spanish 10-y bond auction. The euro's recent bearish trend was largely due to fears among investors that Spain will need a bailout in the near future. Should today's bond auction show poor demand for Spanish debt, the euro could begin falling against its main currency rivals as a result. That being said, a positive bond auction could generate risk taking among investors. In such a case, the euro could extend yesterday's gains vs. the dollar and yen.