The euro produced muted results as markets open following Spaniards vote for a new government to guide them through the debt crisis. Austerity-driven Rajoy asked Spaniards to prepare for hard times. This came after Spanish 10-year bond yields traded higher than Italy’s on Friday. There were reports that the IMF could enhance its lending capacity by borrowing from the European Central Bank. The debate over whether the ECB should intervene more decisively in sovereign bond markets is carrying on and investors will monitor the developments in anticipation of any breakthroughs. Versus the US dollar, the single currency opened slightly lower at 1.3515 from 1.3524.

The US dollar opened lower against a basket of currencies as the “supercommittee” failed to reach an agreement on the US debt ceiling over the weekend. Dallas Federal Bank President Fisher was quoted saying that if the US does not resolve its debt issues, the bond markets will ultimately retaliate and soaring bond yields will be experienced. Against the Japanese yen, the US dollar opened lower at 76.76 from 76.89 as the minutes of the Bank of Japan's Oct. 27 meeting revealed that the board decided, by an 8-to-1 vote, to expand its asset-buying program to Y55 trillion to support Japan's export-led economic recovery amid growing downside risks.

The Australian dollar opened almost unchanged at 1.0005 versus the US dollar and risk appetite (or aversion) is expected to guide the pair. The British pound gapped slightly lower to 1.5799 from 1.5805, against the US dollar.

Oil prices opened higher at 97.29 dollars a barrel from 96.89. Gold opened unchanged at 1723.66 dollars an ounce. Silver gapped higher to 32.39 dollars an ounce from 32.3375.

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