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Forex - Euro higher vs. most rivals as risk appetite recovers

Published 11/22/2011, 05:31 AM
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Investing.com - The euro was broadly higher against its major counterparts on Tuesday, as fears over immediate U.S. credit downgrades eased but the shared currency remained under pressure after an expensive Spanish bond auction.

During European morning trade, the euro was up against the U.S. dollar, with EUR/USD rising 0.42% to hit 1.3545.

Spain’s Treasury sold EUR2.98 billion in three and six-month bonds in an auction which saw yields rise to 5.2% for the six-month bills, from 3.3% at a similar auction in October.

It was the first Spanish debt auction since the conservative party's sweeping election victory on Sunday, but investors have remained jittery as plans on how to cut the deficit and restore market confidence have remained unclear.

Elsewhere, Greek Finance Minister Evangelos Venizelos said earlier that euro zone officials would make a decision regarding the next tranche of Greek aid as soon as November 29.

Market sentiment was boosted after ratings agency Fitch said Monday that the failure of a U.S. congressional committee to agree on a package of measures to slash the country’s deficit was likely to lead to a revision of the U.S. rating outlook to ‘negative’, rather than a downgrade.

The single currency was also higher against the pound, with EUR/GBP gaining 0.31% to hit 0.8651.

In the U.K., official data showed that public sector net borrowing fell more-than-expected in October, declining to GBP3.4 billion from GBP10.2 billion the previous month.

Elsewhere, the euro was higher against the yen but slipped against the Swiss franc, with EUR/JPY climbing 0.38% to hit 104.09 and EUR/CHF slipping 0.15% to hit 1.2353.

Earlier in the day, official data showed that Switzerland's trade surplus widened more-than-expected in October, as the strong franc continued to put pressure on export growth.

The common currency edged higher against its Canadian, Australian and New Zealand counterparts, with EUR/CAD adding 0.18% to hit 1.4055, EUR/AUD easing up 0.10% to hit 1.3721 and EUR/NZD rising 0.22% to hit 1.8096.

Later Tuesday, the U.S. was to release preliminary data on gross domestic product, while the U.S. Federal Reserve was to publish the minutes of its November policy meeting.

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