Euro calm, boosted by optimism over ECB action
Published: 8 Aug at 4 PM
The euro was steady versus the dollar in Asian trading on Wednesday, helped by increased optimism that the European Central Bank will launch measures to reduce Spain and Italy’s borrowing costs.
The single currency remained largely unchanged from Tuesday’s late US trade at $1.2394, close to its one-month peak of $1.2444 reached on Monday on the EBS trading platform.
Meanwhile, the yen recovered from a lull on Tuesday to climb again as investors continued to opt for riskier assets on optimism that the ECB will come up with a plan to contain the debt crisis in the euro zone. Against the Japanese currency, the dollar fell by 0.1 per cent to 78.52 yen, but was sat close to the top of the 77.90-78.80 range which it has been in for the majority of the last two weeks.
However, an increase in US treasury yields was able to support the greenback against the yen. Both 10-year and two-year US yields have jumped to one-month peaks this week with investors showing more appetite for risk. Credit Agricole’s Mitul Kotecha said that two-year yields have increased over the past few days and that he is of the opinion that if they continue to do so, the dollar/yen will face upward pressure.