The value of the shared currency of the European Union notched its top value in seven days against the world's reserve currency on Thursday after developments in the euro zone indicating the damaging tendencies of the sovereign debt scourge are easing, published reports indicate.
Mario Draghi, president of the European Central Bank, noted manifestations of economic stability in the embattled region, Bloomberg reports
. Spain, one nation at the core of the debt crisis, conducted a very successful auction of debt that saw it sell nearly twice the maximum target.
Consequently, the 17-nation shared currency rose against 14 of 16 major rivals.
Also driving the euro's rise was expenses and costs on borrowing in Italy fell at the Mediterranean nation's debt auction. Policy makers with the ECB opted to leave the benchmark interest rate at record lows of 1 percent.
"Any good news for the euro zone could be a trigger for traders to cover their short positions," foreign exchange
manager Mamoru Arai with Mizuho Financial Group in New York told Bloomberg. "The market focused on the fairly positive comments about the European economy from Draghi, but I think they were well balanced. And there was the good auction from Spain."
The president of the ECB told reporters at a press conference in Germany that some indications demonstrate the regional economy is straightening despite the sovereign debt crisis looming in the backdrop.
One market strategist said the performance of the euro is reflective of the demeanor of the ECB chief.
"The euro is rising because Draghi is not as dovish as he could have been," Elizabeth Gregory with Swissquote Bank in Geneva told Bloomberg. "Given the doom-and-gloom assessment of the euro zone within the media, his take on the situation is a lot more optimistic and balanced."
But the performance of the euro also was tempered as a consequence of unemployment figures from the U.S., the globe's largest economic system, according to
The Wall Street Journal.
The weekly numbers indicated a rise of applicants for benefit claims, which drives down the allure of currencies considered more risky for investment purposes.
Bond sales in Spain amounted to the equivalent of $12.69 billion, which strategist Mark Ostwald with Monument Securities found to be quite uplifting.
"Very impressive," he told The Wall Street Journal. "As tactics go, it is clear that getting as much done as quickly as possible in terms of funding a deficit is wise in the current environment."
Italian borrowing costs greatly dropped, which drove yields lower than the pivotal 7 percent figure they had exceeded. Portugal, Ireland and Greece were prompted to seek emergency bailouts after their bond yields were higher than 7 percent. Those nations represent the ones most damaged by the debt scourge.
A research head told
Reuters that the euro has significantly benefited from the spoken word of the ECB leader.
"The pair has been grossly oversold leaving it vulnerable to a short squeeze in the near term," research head Boris Schlossberg with GFT Forex in New Jersey told the news source. "However any further upside progress may be limited unless the broader risk appetite improves."
The value of the euro climbed early in the trading day on Thursday, when it showed a marked reversal from its lowest value of 16 months just one day prior, Reuters reports.
But, despite the good trading day, the monetary unit remains under duress.
"Our suspicion is that the euro zone will suffer further appreciable economic weakness over the early months of 2012, at least, and we expect the ECB to respond by cutting interest rates further," chief European and U.K. economist Howard Archer with IHS Global Insight in London told Reuters. "And we anticipate that mounting evidence of retreating inflationary pressures will give the ECB increasing scope to act."