By: Barbara Zigah
As risk averse investors shun all things related to the Eurozone, the U.S. Dollar has been reaping the benefit. Earlier in the Asian trading session, the greenback had firmed against the common currency Euro, but the latter’s surprising resilience has resulted in a reversal with the Euro higher at $1.3471, as reported at 2:23 p.m. (JST). Yesterday, the Euro was trading at $1.3421, a 5-week low.
That low came on news of widening bonds yields on Spanish and French debt obligations; Spain was already known to be a fiscally troubled Eurozone member, but France has been striving to maintain its fiscal composure in the hope of avoiding just such an event. Yesterday, at the Spanish auction, the yields rose on 10-year benchmark to the highest level seen in more than a decade, approaching the 7% threshold yet falling short of its full target goal.
The U.S. Dollar Index, which gauges the strength of the greenback versus a weighted basket of currencies which includes the Euro, retreated slightly off 78.467 .DXY, a 5-week high, to trade at 78.282 .DXY. A sell-off in high risk currencies, including the Australian Dollar, helped the Index. The Australian Dollar fell below parity, trading at $0.9986, rebounding slightly from the overnight low of $0.9973.