Intraday Market Thoughts

EURUSD Little Changed Despite Robust Italian Auction

by Patrik Urban
Dec 28, 2011 13:10

Italian bond auctions sees strong demand that results in lower yield; Swiss KOF weakest since mid 2009. Market continues to trade in narrow ranges. No data is due in NY session. US equity futures are up 0.25-0.30%. Our latest Premium trades on EURUSD, AUDUSD, USDCAD, gold & silver are found in the link below.

Despite low volatility and narrow ranges, the greenback is slightly weaker in the ongoing session. European equities are higher between 0.3% to 0.7% and the relative strength winners are NZD followed by CAD.

Results from Italian bond auction helped to improve sentiment as Italy sold EUR 9 bln (9 bln target) worth of 6 month bills with average yield considerably lower at 3.251% from previous 6.504%. Bid to cover also improved to 1.62 from 1.47. The Italian treasury also sold EUR 1.73 bln (1.5 2.5 bln target) of 2013 CTZ bonds with 4.853% yield compared to previous 7.814%. Bid to cover also improved to 2.236 from previous 1.59. Lower yield and good demand could imply that ECB's LTRO is being received well and at least temporarily calmed investors. EURUSD trades little changed around 1.3070.

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Swiss KOF leading indicator fell in December to 0.01 from November's 0.34 which is the weakest print since mid 2009 and marks 8th month of gradual deterioration. CHF ignored the news and trades slightly stronger against the EUR at 1.2198 and also the USD at 0.9330.

WTI pushed nearly to 101.60 earlier during the session which underpinned the CAD. USDCAD fell from 1.02 to 1.0163. Despite higher oil, gold and silver remain under pressure.


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