Euro has recovered some of its earlier losses against the US dollar, but the 17-nation currency remains vulnerable to the UK pound and the Japanese yen. Even though the latest fears about Italy have been assuaged slightly, there are still concerns about the eurozone’s economic vulnerability, as well as the health of countries in the periphery.
In spite of concerns about what’s next for Italy’s government, demand for bonds was strong at a recent auction. However, yields on Italian bonds rose more than half a percentage point to make it happen. The relief about the ability of Italy to finance its debt has helped the euro recover some of its recent losses against the dollar, but there are still fears.
There are worries that euro’s weaknesses are going to return, though. Recession is still a concern, and the political instability in Italy has just underscored that problems with the periphery threaten to drag the eurozone back into crisis mode. As a result, some analysts think that the euro is still vulnerable — and the fact that it is struggling against the pound is one indication that it could be.
At 14:51 GMT EUR/USD is up to 1.3085 from the open at 1.3061. EUR/GBP is down to 0.8634 from the open at 0.8637. EUR/JPY is down to 119.4160 from the open at 120.1400.
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