The euro approached a 2 1/2-week low against the dollar after borrowing costs jumped at an Italian bill sale.
The 17-nation currency pared an advance versus the yen. Italy sold 9 billion euros ($11.2 billion) of 185-day bills at an average yield of 2.957 percent, up from 2.104 percent on May 29, government data today showed. New Zealand’s dollar weakened against all of its 16 major peers after the nation’s annual trade deficit widened to the most since November 2009.
The euro was little changed at $1.2486 as of 10:13 a.m. London time, after falling to $1.2442 yesterday, the weakest level since June 8. The yen was little changed at 99.33 per euro, paring a decline of as much as 0.3 percent, after touching 98.75 yesterday, the strongest level since June 18. Japan’s currency was little changed at 79.56 per dollar.
The euro has declined 3.7 percent against the greenback this year, with the yen depreciating 3.3 percent.
Italy is also scheduled to sell as much as 5.5 billion euros of five- and 10-year securities tomorrow. The 10-year bond yield fell five basis points today to 6.13 percent. The government sold 2014 zero-coupon notes yesterday to yield 4.71 percent, the most this year.
The euro may find support against the yen at the June 8 low of 98.54, according to data compiled by Bloomberg based on technical indicators. Support refers to an area where buy orders may be clustered.
The yen has climbed 9.5 percent in the past three months, the biggest gain among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar was the second-best performer with a 4.2 percent advance, while the euro lost 3 percent, the biggest drop.
German Chancellor Angela Merkel and French President Francois Hollande meet today in Paris before a two-day European Union summit in Brussels. Tomorrow is the first meeting of European leaders since pro-bailout parties in Greece won at parliamentary elections on June 17. France and Italy are urging Germany to help end the debt crisis, now in its third year.
“For all the bad news out of Europe, it has not been rewarding to those short euro this week,” said Sean Callow, a senior currency strategist in Sydney at Westpac Banking Corp. (WBC), Australia’s second-biggest lender. “That’s probably an indication that the euro will hold up reasonably well into the summit on hope that there is some substantive agreement on at least some of the key issues that need to be focused on.”
Short positions are bets on a decline in an asset price.
The New Zealand dollar was set for the first quarterly decline since September. The nation had a trade deficit of NZ$805 million ($636 million) in the 12 months ended May 31, the most since November 2009, Statistics New Zealand said today.
The so-called kiwi dropped 0.3 percent to 78.87 U.S. cents and has fallen 3.6 percent since the end of March. It declined 0.3 percent to 62.73 yen.