American focus: the euro fell to a three-week low against the dollar

The euro fell to a three-week low against the dollar as Spanish and Italian bonds slumped and borrowing costs increased at a French auction, adding to concern the region’s debt crisis is spreading. The 17-nation currency dropped to a three-week low versus the yen as Spain’s 10-year bond yields increased to the biggest spread compared with German bunds since November amid investor concern that Spanish Prime Minister Mariano Rajoy may require international aid. Spain’s 10-year yields increased to 400 basis points, or 4.0 percentage points, more than similar-maturity bunds after demand declined at a Spanish debt sale yesterday. Italy’s 10- year yield increased 12 basis points to 5.48 percent. France auctioned 4.32 billion euros of 10-year debt today at an average yield of 2.98 percent, up from 2.91 percent at the previous offering on March 1. Borrowing costs for five-year and 15-year debt also increased.

The Swiss National Bank said it won’t allow the franc to go beyond 1.20 per euro after the currency rose past that level for the first time since the ceiling was put in place in September. The Swiss central bank set a limit of 1.20 francs per euro on Sept. 6 to protect exports after investors turned to the nation’s currency as a haven from Europe’s sovereign-debt crisis. The SNB won’t allow the franc to rise above the ceiling and is ready to buy foreign currencies in unlimited quantities, spokesman Walter Meier said by telephone today.

The pound strengthened for a second day versus the euro as the Bank of England left its bond-purchase target unchanged at 325 billion pounds ($515 billion) and its policy rate at 0.5 percent, as anticipated by surveys of economists.