Dollar Rockets To Highest Since January Versus Euro

The dollar surged to its highest since January versus the
slumping euro on Wednesday, as enthusiasm about Italy's successful
bond auction gave way to concerns about the European banking
sector. The euro weakened after a report in the Financial Times
indicated that Euro zone banks have deposited record amounts of
cash at the European Central Bank last week. Meanwhile, significant
drop in Italian borrowing costs failed to generate much appetite
for stocks. The Italian Treasury sold its maximum target of EUR 9
billion of 179-day bills at a rate of 3.251 percent, half of the
euro-record 6.504 percent paid in the previous auction held on
November 25. The country is set to face another test on Thursday
when it auctions its long-term debt. The dollar jumped to $1.2930
versus the euro, and was threatening to take out its January highs.
A move to $1.2870 would take the dollar to its highest since
October 2010. The dollar also surged higher versus the sterling,
rocketing to $1.5457 from $1.5675, as traders abandoned riskier
assets ahead of the New Year's break. A late morning rally drove
the dollar to Y78 versus the yen. In economic news, the U.K. job
market is set to face its toughest year in two decades next year as
unemployment is forecast to rise further, a think tank reportedly
said Wednesday. Unemployment is forecast to climb to 2.85 million
by the end of 2012 and the jobless rate will rise to 8.8 percent,
the Chartered Institute of Personnel and Development (CIPD) said.
Joblessness is seen peaking at 2.9 million in the first half of
2013. Industrial production in Japan declined a seasonally adjusted
2.6 percent on month in November, the Ministry of Economy, Trade
and Industry said in Wednesday's preliminary reading. The material
has been provided by Instaforex Company - instaforex.com