Euro Declines Against Most Majors After Spain Auction Results

Euro Declines Against Most Majors After Spain Auction Results


The euro declined against most major currencies in European deals on Tuesday after Spain's borrowing costs continued to climb at an auction today, increasing concern about the prospects for the economy.
The auction came just a day after rating agency Moody's downgraded 28 Spanish banks even as the government submitted a formal request for a bailout from the European Union.
The Spanish Treasury raised EUR 3.08 billion from the sale of its 3- and 6-month bills. The target set for the auction was between EUR 2 billion and EUR 3 billion.
The agency sold EUR 1.60 billion of the 3-month paper and EUR 1.48 billion of the 6-month debt. Yield increased for both securities from the previous sale on May 22.
Meanwhile, the bid-to-cover ratio for the 3-month T-bill fell to 2.60 from 3.95 in May. The ratio reflects demand for the debt. Investors bid 2.80 times for the 6-month bill, down from 4.30 times in the previous sale.
In economic news, a survey by market research group GfK showed that confidence among German consumers is likely to rise in July. The consumer confidence index for July rose to 5.8 from 5.7 in June. Economists expected the score to fall to 5.6 in July.
The euro that ended yesterday's trading at 99.64 against the yen fell to a fresh 2-week low of 99.05. The next downside target level for the euro-yen pair is seen at 98.5.
Against the pound, the euro dropped to near a 4-week low of 0.8001 from yesterday's close of 0.8030. On the downside, 0.798 is seen as the next target level for the euro.
U.K. public sector net borrowing, excluding the temporary effects of financial interventions, increased to GBP 17.9 billion in May from GBP 15.2 billion a year ago, the Office for National Statistics said. Borrowing was higher than an expected GBP 14.8 billion.
At the same time, net debt at the end of May totaled GBP 1013.4 billion, equivalent to 65 percent of GDP. This compares with a level of 61.3 percent of public debt during the same period of last year.
The euro slipped to as low as 1.2483 against the U.S. dollar, compared to yesterday's close of 1.2504. The near term support level for the euro-dollar pair is seen at 1.245.
The euro declined to a 5-day low of 1.2447 against the Australian dollar and near a 2-week low of 1.2826 against the Canadian dollar. If the euro weakens further, it may target 1.240 against the aussie and 1.280 against the loonie. The euro-aussie and the euro-loonie pairs were worth 1.2501 and 1.2874, respectively at yesterday's close.
Looking ahead, the U.S. S&P/Case-Shiller home price index for April and the Conference Board's consumer confidence report for June are expected in the New York morning session.
Europe is likely to remain in focus throughout the week, as European leaders are due to hold a summit to discuss the ongoing debt crisis on Thursday and Friday.


More FOREX-news on pages InstaForex.Com