Euro Gets a Reprieve on Short Covering

By: Barbara Zigah

In Asian trading, the Euro traded higher against the safe haven U.S. Dollar and Japanese Yen, but briefly struck a new low against the Australian Dollar precipitated by some short covering and an underpinning of investors’ risk appetite. Worries over the Eurozone’s sovereign debt crisis continues to weigh heavily, and investors worry that a lack of clear-cut solutions to the years old crisis could push the common currency lower over the next few months, saved only by intermittent bouts of short-covering which offer some relief.

As reported at 11:18 a.m. (JST) in Tokyo, the Euro was trading against the greenback at $1.2979, a gain of 0.3% but not far from the 2011 low struck of $1.2858 last week on the EBS trading platform. Against the Japanese Yen, the Euro traded at 99.78 Yen, a gain of 0.3% and a slight improvement over the decade long-low of 98.71 Yen struck on the EBS platform yesterday. Against the Australian Dollar, the Euro was trading at a record low A$1.2600 at one point in the session, rebounding slightly to a recent A$1.2609 for the EUR/AUD pair.

Traders will turn their focus back to the Eurozone today now that the Christmas and New Year’s holidays are behind them. Sovereign debt sales take place in Germany tomorrow followed by France on Thursday with the more worrying Italy and Spanish bond auctions to be held next week.