Euro Fell to an 11 Month Low As Investor Wait on Italian Debt Auction
The Euro fell to its lowest in 11 months with 1.3070 against the dollar on Tuesday and it remains at risk for more selling if Italy struggles to sell government debt later in the week. With only a few events scheduled in the last week of December 2011, the investors will be focused on the results of the Italian auctions of three and ten year government bonds scheduled for Thursday.
With the rising borrowing costs of Rome that go towards the unsustainable, it has raised speculations that the third largest economy in the Euro Zone may need a bailout. Italy has been able to sell official debt to the market but the demand has not been able to stop the rising yield. The Auction will be a good test of the market as the debts will have longer maturities.
The Euro may also experience selling pressure with the continued threat of downgrades from rating agencies of Euro zone countries which may include France.
The dollar was slightly weaker as it fell to 79.838 against a basket of currencies in thin trading Tuesday. The dollar was flat against the Yen and up against the pound by 0.2%.Euro