Yen Off Highs, Euro Steps Up

The Japanese Yen moved away from its recent highs on  Thursday against the major currencies, while the Euro  staged a small recovery of its own.

The European Central Bank (ECB) seems to have done  enough to qualm fears over Spain for the time being,  but analysts are warning that debt worries in Spain  and Portugal still have the potential to negatively  impact the currency over the coming days.

 ECB declares that a bond buying programme is still an  option, Australia's jobs report sparks a jump in Aussie  while the Italian debt auction today is the markets  next focal point.

The Euro zone debt concerns moved back in focus  with Spanish bond yields still close to a four month  high and the crucial 6% level.

An ECB board member had suggested that they could  reactivate the SMP (Securities Markets Programme)  facility, which helped to bring calm to a feverish  Spanish bond market.

The Euro will be tested again later in the day with  another sign that investors' concerns about Spain are  spreading to other Euro zone countries hit by  recession, when its 5 billion Euro bond auction is held  and Italian 3 year borrowing costs are then set to jump  by a percentage point from a month ago.

The rate at which Italy pays for one-year money more  than doubled at an auction on Wednesday.

Should the Italian auction disappoint, analysts expect  that the Euro will reverse some of its recent gains.

Nevertheless, with the Dollar funding rates in Europe  remaining stable, the Euro has been fairly resilient.  It reached a 1 week high of $1.3158 earlier today.

The Dollar climbed to 80.90 Yen, up from a six-week  low of 80.57 while the Euro rose to 106.30 Yen.