Euro Advances as Yields Fall at Auctions, German Investor Confidence Rises

The euro rose for the first time in three days against the dollar and the yen as Spanish and Greek borrowing costs fell at auctions, damping concern the region’s most-indebted nations will struggle to fund their deficits. The Australian and New Zealand dollars gained versus most major peers as data showed China’s economy grew faster than forecast. Europe’s 17-nation currency rose from an 11-year low versus the yen as German economic sentiment rose to a record and the European rescue fund sold more than its target at a bill sale even after Standard & Poor’s downgraded it, France and Austria. A regional U.S. factory gauge climbed. “We’re in a positive mood after Chinese data, and some of the bond auctions in Spain and Greece helped,” said Vassili Serebriakov. “The S&P ratings downgrades we saw late last week were certainly not good news for the euro, but as we’ve seen, the market is already very short the currency, so positioning certainly explains some of today’s move toward a stronger euro.” A short position is a bet a currency will weaken.