In US trade, the euro managed to edge higher against the dollar as traders continued to cover short positions established over recent weeks.
IMM speculative positioning data showed that euro shorts were only modestly trimmed last week, laying the ground work for further short covering this week. Also supporting the euro last night was news Italy had successfully auctioned €8 billion of 364-day bills at an a average yield of 2.767%, slightly higher than the 2.697% result for a similar auction last month with demand also stronger than the previous issuance, with a bid-to-cover ratio of 1.69.
It seems investors are thinking ahead of the curve, purchasing short-term debt on expectations that the ECB will soon start doing the same as soon as the details of Mario Draghi's 'new' bond-buying programme are finalised. The pound also managed modest gains last night, benefitting from some mild optimism that central bank intervention from the likes of the ECB, the Fed and the PBoC in the coming weeks and months will put the global economy on firmer footing. Having ended yesterday’s Australian session around the 1.2285 level, the euro touched a high of 1.2373 before ending US trade at 1.2332. The pound also jumped from its Australian close of 1.5665 to a high of 1.5718 before settling at 1.5685.
In early Asian trade, both the euro and the pound are marginally higher, trading in the mid-1.2340s and mid-1.5680s respectively. Tonight looks set to be a more lively one for both currencies with UK CPI data, along with German ZEW Economic sentiment, and European GDP and industrial production data all due for release during the European session.