Resilient Euro Edges Higher Despite EFSF Confusion, Greek Protests
The euro held its ground against major rivals on Wednesday, as traders weighed a flurry of news from Europe, where conflicting reports on the size of a regional bailout fund have emerged in recent days.
Yesterday’s Guardian report that Germany and France agreed to a 2 trillion euro package was “totally false,” according to a German official quoted by Dow Jones.
In another report, the lending capacity of the European Financial Stability Facility will be raised to a maximum of 1 trillion euros, Financial Times Deutschland quoted German Finance Minister Wolfgang Schaeuble as saying.
EU officials will hold a crucial summit to discuss plans to prevent a full-blown crisis on Sunday in Brussels.
Greeks are now staging national strikes to protest austerity cuts that are required as a condition of their next installment of rescue funds.
Meanwhile, Moody’s Investor Service lowered Spanish government rating by two notches on Tuesday, citing the economy’s continued vulnerability to market stress and elevated funding risks.
The euro was able to withstand the confusion on the European Financial Stability Facility and concerns about economic growth.
The single currency strengthened to $1.3870, edging back to a monthly high above $1.39 set Monday.
The euro firmed near Y106.40 versus the yen, staying well away from a 10-year low near 101 set three weeks ago.
Choppy trading left the euro at GBP 0.8740 versus the sterling.
Policy makers of the Bank of England unanimously decided to expand quantitative easing by GBP 75 billion to GBP 275 billion in October, minutes of the meeting released by the Bank of England showed Wednesday.
In economic news from the U.S, the Labor Department released a report on Wednesday showing a modest increase in consumer prices in the month of September.
The Labor Department said its consumer price index rose by 0.3 percent in September following a 0.4 percent increase in August. The modest increase in prices came in line with economist estimates.
Fueled by an increase in multi-family dwellings, U.S. housing starts surged unexpectedly in September, according to figures released Wednesday by the Commerce Department.
U.S. housing starts came in at a seasonally adjusted annual rate of 658,000, 15 percent above the revised August estimate of 572,000, itself little changed from the initially reported level of 571,000.
