EUR/USD rallies on narrowing German/periphery spreads

After a first rally in the European morning due to improving manufacturing PMI, especially in Germany where it has turned to expansionary, the German and Portuguese bond auctions resulted in lower yields for both sovereigns and it has been observed that, in general, the German/periphery bond spreads are narrowing.

The improved sentiment is also being boosted by rumors that a Greek PSI deal is practically finished, with possible announcement today.

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