With little European news on the day, currency market speculators turned their focus to today’s Portuguese short term bill auction for Euro support.  The results were astonishing – especially given the growing concern over Portugal’s fiscal health and its speculated request for a second bailout.  Nonetheless, today’s auction is boosting buying demand in the single currency, which is currently at 1.3188.  The Euro had been as low as 1.3028 earlier in the session.

According to government debt agency results, the Portuguese government was able to raise about 1.5 billion euros in short term funding – amid 3 and 6 month treasury bills.  Notably, yields were slightly lower following the auction.  But, not as drastically lower when compared to earlier French and Spanish auctions held in both December and January.  For the record, the 3-month average bill rate fell to 4.07% from 4.35%, while the 6-month bill yield dropped by almost 30 basis points to 4.46%.  Demand for the auction came in at a rather healthy average of 2.7 times the supply, down from about 3.5 times from a previous auction – not bad for an economy still undergoing massive austerity implementation and falling credibility among peer nations.

The auction results were enough to convince markets – at least for now – that the Portuguese government remains capable of tapping global debt markets, and at a convincing level.

The sentiment has taken benchmark yields lower from record highs hit on Monday of just below 17.5%, to just around 15.8% on the session.  It is also lending some further momentum for a currency that has been on the rebound since mid January.