By Stephen L. Bernard Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The euro was unable to sustain early momentum Tuesday and ended New York trading modestly higher against the dollar as investors turned cautious before Portugal's upcoming debt auction.
The euro got a lift early in the day from some supportive remarks from Japanese leaders and news the European Central Bank was in the market buying sovereign debt. But those gains were somewhat fleeting as traders grew anxious before Wednesday's debt auction in Portugal.
"Investors are nervous" to make any moves before the auction, said Paresh Upadhyaya, director of G10 FX Strategy at Bank of America-Merrill Lynch. "It's the first meaningful auction of the new year."
Portugal's prime minister said Tuesday the country wouldn't need a bailout, but analysts widely believe it could be next in line to tap the European Union's and International Monetary Fund's joint aid program. Portugal is scheduled to auction up to EUR1.25 billion ($1.62 billion) worth of debt Wednesday, an event that's seen as the next litmus test for investor appetite for European debt during a period of uncertainty.
Strong auction results could drive the euro higher, but Upadhyaya said any gains would be tempered because of profit taking as ongoing concerns about the sovereign debt crisis will linger beyond Wednesday's auction. Upadhyaya said traders might start to take some profits around the 200-day moving average of around $1.3077.
Tuesday, the euro was at $1.2975 in late trading in New York from $1.2952 late Monday, according to EBS via CQG.
To see the euro's performance against the dollar, please see: http://www.dowjoneswebservices.com/chart/view/5245
The dollar was at Y83.24 from Y82.71, while the euro was at Y108.00 from Y107.10. The U.K. pound was at $1.5606 from $1.5573. The dollar was at CHF0.9737 from CHF0.9676.
The ICE Dollar Index, which tracks the U.S. dollar against a trade-weighted basket of currencies, was at 80.826 from 81.012.
Bond yields for countries such as Portugal, Greece and Ireland have widened against Germany's debt in recent months because traders aren't sure whether countries facing large debt burdens and slow economies will be able to fully repay debt. Greece and Ireland have already had to tap the EU/IMF bailout program.
"At times the euro looks like it's trying to make an attempt to the upside, but it's not convincing," said Nick Bennenbroek, head of currency strategy at Wells Fargo in New York. The impending auction in Portugal and uncertainty about the result "means the euro is unable to sustain gains at this point."
The euro got a lift early Tuesday after Japan's finance minister, Yoshihiko Noda, said his country was prepared to purchase more than 20% of the securities issued by the European Financial Stability Facility, the bailout fund for the 17-nation currency bloc. The comments helped push the euro to an intraday high of $1.2994 before it slipped into a tighter trading range later in the day.
Traders also said the European Central Bank's purchases of euro-zone government debt for the second straight day gave the common currency some support.
Elsewhere, the Australian dollar continued its recent tumble against the U.S. dollar, falling to $0.9875 from $0.9956 late Monday after the Australian government warned of further possible devastation from massive flooding in the state of Queensland. The Australian dollar has dropped six of the past seven days against the U.S. dollar.
Weeks of heavy rains have flooded Queensland, seriously disrupting the area's booming coal mining industry. Government leaders forecast A$10 billion in clean-up costs and lost revenue from the flooding.
-By Stephen L. Bernard, Dow Jones Newswires; 212-416-4528; stephen.bernard@dowjones.com
--Javier E. David and Andrew J. Johnson contributed to this article.
This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php
Five Filters featured site: So, Why is Wikileaks a Good Thing Again?.
No comments:
Post a Comment