Euro takes Asian breather after rally

The euro held its own in Asia on Friday after rising broadly overnight in the wake of Italian and Spanish debt sales drawing solid demand.The commonly currency rose as high as $1.2846, in turn pulling away from a trough of 16-months near $1.2660 that was set Wednesday.

The euro last stood at exactly $1.2813, with traders stating that a break of $1.3000 is needed to trigger further short covering. Measured against the Japanese yen, the euro stood at 98.34 off the heels of an 11-year low of 97.28 that was plumbed recently.

In Europe though, it dropped to a low not experienced in four months against the Swiss franc at 1.2078 as the market appeared to be testing a resolve from the SNB after its recent currency cap and controversial resignation of its governor.

The European Central Bank commented that its flood of cut-rate 3-year loans has been helping banks, and that the bloc's economy is showing signs of stabilising in activity. Backing this, analysts have said that nearly half a trillion euros that was injected by the ECB in December has gone into supporting yesterday's debt sales that resulted in Span selling twice the amount of bonds it planned to at lower rates.

Italy's auction of debt also drew a strong demand with expectations high. Renewed euro vigour knocked the US dollar down 0.6 per cent against major currencies with the greenback having also underperformed against some commodity currencies.