28th December 2011
The euro is on the cusp of falling to an 11-month low against the dollar following thin forex trading on Wednesday (December 28th) and could come under further pressure from Italian debt auctions.
According to Reuters, the single currency last stood at $1.3072, perilously close to the trough of $1.2945 hit on December 14th.
Italy is expected to see demand from domestic banks when it sells up to €9 billion of six-month treasury bills and €2.5 billion of two-year zero coupon bonds today.
However, the sale of €8.5 billion worth of up to ten-year debts on Thursday is predicted to pose more of a problem.
Niels Christensen, FX strategist at Nordea, said: "The bond auction seems to be the biggest event this week and it's also a theme that will probably dominate the market in the first quarter of next year."
The country's bond yields eased on December 14th when €3 billion of five-year debt was sold at auction.
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