The euro held steady around the $1.35 level in early morning trade, helped by a round of short covering going into the weekend. Reports of an EU paper on the issuance of common bonds also seemed to help the mood, as did news of an outright victory for the conservative party in Spanish elections. The dollar also came under some mild pressure with a US congressional super committee expected to make some formal announcement today on its plans for $1.2 trillion in budgetary savings over the next ten years. At …

After falling to fresh one month lows of $1.3423, the euro has recouped some of the losses seen versus the dollar and yen yesterday with players reported to be taking profits on recent moves. However, as the threat of contagion in the euro zone continues to build many are concerned at how long the single currency can remain resilient to the region’s sovereign debt problems. Though the problems may not be confined to the euro zone with Fitch yesterday warning of the exposure of US banks to European debt, which …

The euro is holding steady but at the lower end of recent trading ranges as markets continue to focus on the eurozone debt crisis. Optimism following new PMs in Greece and Italy has been undermined by yesterday’s rise in yields and markets will be on edge ahead of this morning’s release of the eurozone Q3 GDP report. Data released early this morning showed that German GDP grew at an expected rate of 0.5% in Q3, an acceleration from 0.3% in the previous quarter. This morning also sees the release of …

Europe is likely to dominate the headlines once again this week as traders watch political developments in Italy and Greece. The expectation is that national governments will be fully operational in both countries over the coming days so markets will be looking for progress on fiscal initiatives and economic reforms. There are new PMs in place in both countries now, with the Italian lower house of parliament giving its final approval to a package of economic measures over the weekend. Sentiment was also boosted overnight by the news that the …

With the positive impact of the news that Italian PM Silvio Berlusconi is to step aside quickly wearing off, risk aversion spiked higher once again yesterday. A jump in 10-year Italian bond yields well above the 7% level that many consider unsustainable caused investors to move into safe haven assets such as the USD. As well as the rise in yields, the news that clearing house LCH.Clearnet had raised its initial margin requirements on Italian bonds, making the market more expensive to trade also hit sentiment.
Under heavy selling pressure for …

Greece’s major parties agreed yesterday to form a national government that will oversee elections after putting in place a fiscal deal. George Papandreou will step down to make way for a new PM that will be picked under common agreement. The administration is hoping to agree on the details of the new government today, including the appointment of specific ministers. This is ahead of a meeting of euro zone finance ministers in Brussels that is expected to discuss Greece’s next aid payment. There was some talk overnight that former ECB …