Euro Declines after Downbeat Confidence Data and Italian Bond Sale  

The sentiment in the euro zone has deteriorated further in the month of April according to the economic confidence report, where the economic confidence indicator retreated significantly to 92.8 from the revised previous of 94.5 from 94.4, worse than expectations of 94.2.

The industrial and services sentiment deteriorated as well in April, especially after the downbeat performance of the manufacturing and services sectors, which contracted sharply. The industrial confidence index remained negative at -9.0, up from the revised previous of -7.1, below estimates of -7.0. In addition, the services confidence shed to -2.4 from -0.3, also missing estimates of -0.5.

The sentiment was affected sharply in April by the several downbeat auctions ran by European indebted nations, where European lawmakers stood still watching borrowing costs rising at auctions, adding more pressures on European countries that already struggle to cut deficit and boost growth.

The EUR/USD pair surrendered most of the gains recorded today, to currently trade around $1.3217, after recording the highest at $1.3262 and the lowest at $1.3209, compared with the opening level of $1.3215.

Italian borrowing costs rose at an auction today to the highest level since January, renewing fears and concerns the continuous pressure driven by the debt market might force large economies such as Spain and Italy to follow other highly indebted vulnerable economies such as Greece and Portugal.

The Italian Treasury sold 8.5 billion euros of bills maturing after six months, as demand for Italian debt was strong, rising to 1.7 times the quantity offered, compared with the previous of 1.5 times. Yields also surged, where Italy has to return 1.77% now, up from the previous of 1.12% recorded an auction earlier.

The sterling pound surrendered some of the gains recorded earlier today, affected by the deteriorating confidence in Europe, where the euro zone is the largest trade partner to the royal economy. Therefore, worse economic conditions in Europe weigh sharply on the Kingdom.

The GBP/USD pair retreated after recording the highest at $1.6206 to currently hover around the level of $1.6180. The pair started the session today at $1.6160 and reached a low of $1.6157 so far.