The euro hovered just above multi-year lows against the yen and Australian dollar in Asia on Thursday as markets refocused on concerns about the eurozone debt crisis ahead of a French debt auction later in the session. France plans to raise up to 8 billion euros in 10- to 30-year debt a day after a subdued German bond auction. Berlin attracted only slightly better demand than was seem at a disastrous sale last year.
"There is not so much fear of a bad result, but markets are also looking ahead to next week's debt sales by Spain and Italy, which have deeper exposure (to the region's debt crisis)", said Kimihiko Tomita, head of foreign exchange for State Street Global Markets in Tokyo. France was expected to draw solid demand for its 10-year bonds, as yields offer an attractive premium to benchmark German bunds.
Data last week showed currency speculators had boosted bets against the euro to a record high in the week ending December 27, setting up conditions for a possible short squeeze. "While a short-term euro bounce is possible because of positioning, pressure on the euro remains and we can't be optimistic about its upside potential," said Koji Fukaya, chief currency analyst at Credit Suisse in Tokyo. The single currency stood at 99.15 yen, down 0.1 percent, having slumped to an 11-year low of 98.71 yen on Monday. Against its Australian counterpart, it bought A$1.2508, up 0.2 percent on the day and off a session low of A$1.2478, but not far from an all-time trough of A$1.2469 hit on Wednesday. It fetched C$1.3100 against the Canadian dollar, nearly flat on the day but plumbing a one-year low around C$1.3073 hit Wednesday.
Against the greenback, the euro was at $1.2918, down 0.2 percent and not far off a one-week low of $1.2896. A break below December 29's $1.2856 would take it back to levels not seen since September 2010. On the upside, option traders have various option barriers at $1.2950 and below.
Renewed pressure on the euro helped the dollar index climb 0.1 percent to 80.204 and also gave the greenback a boost against the Australian dollar, which bought $1.0320, down 0.5 percent and moving farther away from an eight-week peak of $1.0387 set on Tuesday.