Euro Drops to 11-Month Low Against Dollar Ahead of Debt Sale

Euro Drops to 11-Month Low Against Dollar Ahead of Debt Sale

The euro hit an 11-month low against the U.S. dollar on Wednesday as a slide on regional debt worries triggered stops, with thin trading exacerbating volatility ahead of a key Italian debt sale on Thursday.
The euro had advanced earlier in the session after an Italian debt auction at which short-term borrowing costs were halved, a potential good sign for a sale of longer-dated bonds on Thursday.
But those gains were short-lived, as the euro slid to a session low of $1.2938, its lowest since January, before rising back to trade at $1.2949.
Analysts said a European Central Bank report showing regional banks were still taking on liquidity to build reserves instead of adding risk rattled markets.
There appeared to be reluctance among European banks to lend to each other or invest in euro zone sovereign debt, analysts said, despite a recent massive liquidity injection by the European Central Bank through a three-year long-term refinancing operation.

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