The euro continued to be firmer for the second consecutive day on Wednesday, as the difference or spread, between the benchmark 10-year US-German bond yield narrowed sharply.

While the yield on German 10-year bonds fell 0.615 percent, the U.S. equivalents fell 2.09 percent, the lowest in over three months. The spread between 10-year US-German bond yields declined to 145-146 basis points, adding to the strength in the euro.

Investors rushed to safe-haven German bonds and Treasuries, thereby weakening their bond yields, after China let the yuan to fall sharply for the second day running. Yields move inversely to bond prices.

Optimism over developments in Greece also underpinned the currency. Greece locked up its third bailout deal with its international lenders on Tuesday, paving the way for a Parliament vote on the deal before an August 20 debt payment to the European Central Bank.

In economic news, data from Eurostat showed that Eurozone industrial production declined more than expected in June.

Industrial production dropped 0.4 percent in June from May, when it decreased by revised 0.2 percent. This was the second consecutive fall in production.

The currency has been rallying since yesterday, after Greece concluded EUR 86 billion bailout deal following marathon talks.

In European trading, the euro appreciated to 138.79 against the Japanese yen, its highest since June 25. The next possible resistance for the euro-yen pair is seen around the 139.5 zone. The pair was worth 138.14 at yesterday's close.

The latest figures from the Ministry of Economy, Trade and Industry showed that Japan's industrial production increased more than initially estimated in June.

Industrial production grew a seasonally adjusted 1.1 percent month-over-month in June, revised up from a 0.8 percent rise in the flash data. In May, production had fallen 2.1 percent.

The euro spiked up to more than a 4-week high of 1.1158 against the greenback, up from Tuesday's closing value of 1.1042. Continuation of the euro's uptrend may take it to a resistance around the 1.13 area.

The single currency strengthened to 1.0962 against the franc, a level not seen so far this year. The euro is seen finding resistance around the 1.12 level. At yesterday's close, the pair was quoted at 1.0782.

Data from Mannheim-based Centre for European Economic Research and Credit Suisse showed that Switzerland's economic expectations rebounded in August, indicating an improvement in economic activity.

The ZEW-CS economic expectations indicator rose 11.3 points to 5.9 in August from -5.4 in July.

The 19-nation currency that ended yesterday's trading at 0.7089 against the Sterling climbed to more than a 4-week high of 0.7170. If the euro extends rise, it may challenge resistance around the 0.725 level.

Data from the Office for National Statistics showed that U.K. jobless claims declined unexpectedly in July.

The number of people claiming unemployment benefits declined by 4,900 in July from June, while it was expected to rise by 1,000. The claimant count rate held steady at 2.3 percent as expected by economists.

The euro advanced to 1.4579 versus the Canadian dollar for the first time since December 2014. On the upside, the euro may locate resistance near the 1.47 mark. The pair ended Tuesday's trading at 1.4478.

Looking ahead, U.S. monthly budget for July is set to be announced in the New York session.

At 8:30 am ET, Federal Reserve Bank of New York President William Dudley is expected to speak before the Rochester Business Alliance on the local economy and the benefits of workforce development in Rochester, New York, U.S.

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