Euro holds firm despite Spanish ratings downgrade

SYDNEY: The euro clung on to most of its overnight gains early in Asia on Thursday, while commodity currencies like the Australian dollar came under renewed pressure following a negative close on Wall Street. The euro last stood at $1.2574, having risen as high as $1.2611 on Wednesday as investors trimmed very bearish positions on the single currency. But a three-notch downgrade of Spain’s credit ratings by Moody’s saw the short-covering come to an abrupt end. Italy is due to sell up to 4.5 billion euros of bonds later on Thursday. The bond sale comes a day after the country’s one-year borrowing costs hit a six-month high of 3.97 percent at a debt auction. However, traders said there is little conviction in the market as the overarching focus is on Greece’s election this weekend. Against the yen, the euro stood at 99.90, not far off an overnight peak around 100.11. The dollar fetched 79.45 yen, having traded in a slim range of 79.30 and 79.75 on Wednesday. Reflecting a firmer euro, the dollar index drifted down to 82.143 from a session high of 82.581. reuters

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