Euro off to a choppy start amid EU confusion
Sun Sep 25, 2011 7:39PM EDT
By Cecile Lefort
SYDNEY (Reuters) - The euro got off to a wobbly and volatile start on Monday in early Asia as investors reacted cautiously to mixed news out of Europe to tackle its escalating debt crisis.
The euro bobbed up as high as $1.3585 on EBS at the start of trading as some reports suggested EU leaders were considering much bolder moves to ring fence Greece, Ireland and Portugal.
However, a lack of detail soon saw the euro edged back to around $1.3521, a shade higher than New York's finish on Friday.
The single currency remains close to an eight-month trough of $1.3382 struck last week. It was steady against the yen at 103.55, having skidded to a decade low last week at 102.20 yen.
News reports over the weekend suggested concern now appeared to be turning toward protecting the banking system and preventing contagion through enhancing the 440 billion euro-EFSF more than rescuing Greece.
Indeed, as the idea of a Greek default has gained pace, there is talk international authorities were working on a plan toward a "managed default" for Greece some time around the next G20 meeting in Paris in November.
At the same time, the European Central Bank (ECB) would likely reinstate a one-year lending facility to shore up banks, while intensifying recession fears could force the ECB to cut rates at its next meeting on Oct 6.
While all these discussions should be positive for risk sentiment, markets have been disappointed many times before.
S&P's warning that Europe's plans to ramp up its fight against the crisis could result in credit downgrades could dampen investor's fragile enthusiasm.
For now, support for the euro is found at $1.3455 ahead of $1.3418, with major resistance at $1.3585.
The dollar index edged down 0.4 percent to 78.157, from a peak of 78.618 on Friday. The dollar was steady against the yen at 76.60, still within the snug 76.30/77.85 range of the past month.
Markets were also focused on the United States and its short-term budget issues with Congress due to debate on another spending bill later on Monday. If lawmakers fail to act, a program that assists disaster victims could run out of money by Tuesday. |
