Optimism About Europe Evaporates, Euro Weakens

The optimism, caused by the speculation China is going to buy Italy’s debt, quickly wane and the euro fell after Italy auctioned its debt. The optimism, caused by the speculation China is planning to buy the Italian debt, was defeated by the skepticism that China alone won’t be able to prevent the spreading of the debt crisis to the European nation. The skepticism strengthened as the borrowing costs increased. Italy sold €3.9 billion of the new benchmark five-year bonds with the average yield of 5.6 percent. Last time the bonds with the same maturity was sold the yield was 4.93 percent. EUR/USD fell from 1.3679 to 1.3659 as of 11:52 GMT today, while touching the low of 1.3557. EUR/JPY dropped from 105.09 to 105.13 after it reached the daily low of 104.39.