Euro surges in New York

The euro rose the most against the dollar in six months on Thursday and further gains were expected in the near term following solid Spanish and Portuguese debt auctions and after the head of the European Central Bank expressed concerns about inflation. At the session peak, the euro climbed to near $1.34 as its sharp rebound prompted investors to cover short positions.
At current prices, the euro was on track for its best weekly performance since May, 2009, though some analysts cautioned that the euro's downtrend is far from over. ECB President Jean-Claude Trichet said price stability was not under threat, remarks that drove expectations the ECB could raise interest rates, helping to spark the short-covering. Strong demand at Spain's bond auction, one day after a solid Portuguese debt sale, helped ease pressure on peripheral bond markets, although analysts noted sales represented a very small percentage of supply from those countries this year.
The euro climbed as high as $1.3383 on trading platform EBS, almost 3 cents above the day's low at $1.3088. It last traded up 1.68 percent at $1.3350, on pace for its biggest one-day rise since July 1. Gains pushed the euro close to the 100-day simple moving average at $1.3404 using EBS prices after powering through the 50-day SMA at $1.3324.
Traders cited buying from Asian central banks and demand from momentum players, options players and investment funds. Goldman Sachs on Thursday recommended going long euro against the dollar, targeting $1.37, saying European sovereign debt tensions will ultimately ease.
Analysts said the euro might see some support on speculation that a solution to the debt crisis may come soon. Top European Union officials are pushing for the bloc to increase the size and scope of the 440 billion euro ($574 billion) rescue fund. He said Portugal's snowballing debt-financing costs would ultimately force Lisbon to ask for a bailout, while Spain faces a hefty rollover of existing debt in April. Still, a bailout for Madrid was unlikely, Subbarao said. The euro climbed to a one-month high of 1.2885 Swiss francs ahead of an emergency meeting of Swiss unions and industry representatives, with the subject expected to be the record-strong Swiss currency.
The dollar fell 0.3 percent to 82.80 yen on EBS after US jobless claims jumped to their highest level since October dented optimism about the US economy, though analysts cautioned against reading too much into the data. The Australian dollar rose past parity against its US counterpart at the session peak on US dollar weakness. Investors also looked past a less-than-expected rise in Australian employment for December.