Euro Near 8-Week High as Italy Prepares to Auction Debt

The euro was 0.2 percent from an eight-week high before Italy sells debt amid speculation the European Central Bank is preparing a bond-buying program that may cap borrowing costs for nations in the region.

The 17-nation currency headed for gains versus most of its 16 major counterparts this month after yields more than halved at an auction of Spanish bills yesterday and as ECB President Mario Draghi canceled his trip to the annual symposium in Jackson Hole, Wyoming this week to prepare for the central bank's next meeting. The Australian and New Zealand dollars slid against most peers after global declines in equities.

“We can apparently avert a situation where the debt crisis will trigger a collapse of the euro,” said Masato Yanagiya, head of foreign-exchange and money trading in New York at Sumitomo Mitsui Banking Corp. “Markets are expecting Spain to ask for a bailout, but it will spur the European Central Bank to undertake a measure like the Securities Markets Program,” he said, referring to the ECB's bond-buying operation.

via Bloomberg