Euro loses gains after Italian auction The euro moved lower against other major currencies on Friday after a fresh auction of Italian government bonds underwhelmed investors, increasing the bearish sentiment on the single currency. Traders said that the relatively successful Italian auction - with yields on three-year bonds lower than the last auction at the end of December - attracted less demand than expected and was not as positive for market sentiment as a bond auction in Spain the day before. The single currency gave up gains made the previous day to fall 0.4 per cent against the dollar to $1.2774, 0.4 per cent against the pound to £0.8329 and 0.4 per cent against the yen to Y98.01. Currency analysts said that many investors still expected the euro to weaken further, dismissing many of the gains this week as short covering by speculators who had increased their bets that the euro would fall against the dollar to record levels. Analysts also noted a shift in the trading pattern of the euro this week, which has tended to fall while other risk-on currencies such as the Australian dollar have risen. For much of last year, the euro rose and fell in line with other currencies that benefit from global growth. The decision by the European Central Bank on Thursday to hold interest rates steady at 1 per cent was not seen as supportive for the euro, with expectations that rates will be cut in the near future to help exports. "The shift in ECB style and policy will take the euro lower in the weeks ahead and makes the euro less able to benefit from periods of positive risk sentiment this year," said Kit Juckes at Société Générale. Currencies linked to commodities including the Australian dollar, New Zealand dollar and Canadian dollar were broadly flat on Friday following a week of gains against the US dollar. The Australian dollar was up 1 per cent at $1.0336, the New Zealand dollar rose 0.8 per cent to $0.7938 and the Canadian dollar was 1 per cent higher at $0.9818. The euro was 0.7 per cent higher against the dollar - its first weekly rise in six weeks.