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Currencies: Euro Edges Higher on Intervention Talk

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The forex market showed little movement overnight as traders thought through their positions on major currencies ahead of important U.S. data in the next couple of days. The battered euro was actually holding above last night's close of $0.8625 and was opening at $0.8650.

The topic of possible intervention to boost the euro has been running through the market again. The German magazine-

Focus Money

- reported that the French authorities were pushing for intervention to raise the euro to about 90 cents. The report indicated that the U.S. was being asked to support the effort. The

French Finance Ministry

immediately denied the report.

"First we had the report, and then the spokesman for the French Finance Ministry denying the report -- this showed the fudge that's going on," said Mike Moran of

Standard Chartered Bank.

Later,

Bundesbank

council member

Klaus-Dieter Kuehbacher

added to the confusion with a comment during a radio interview. "A unilateral intervention from the European side is not at all possible. It can only be done together with the Americans," he said.

Dollar/yen was opening higher at 107.20. The yen was softer on talk that the next Japanese quarterly

GDP

data would be weaker than expected.

The euro made headway yesterday vs. the yen and had made further gains in the last few minutes to open at 92.80.

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Sterling also was holding around last night's close at $1.4100. In sterling terms, the euro is steady at 61.40 pence.

U.K.

earnings

fell in the three months ending July to 3.9%, from 4.1% in the previous period. This slowing growth suggests that the

Bank of England

will remain relaxed about the risk of inflationary pressure.

"Inflation is benign, and the market thinks we are not going to see further interest-rate rises," Moran said.

The Swiss franc was unchanged at 1.7655. In terms of the euro, Swissy was easing back from recent record highs at 1.5280.

The Canadian dollar was slightly firmer at C$1.4790.

The Aussie dollar was easier at $0.5540 after touching a record low of $0.5525 following publication of Australian second-quarter

GDP

. GDP rose a reasonable 0.7%, but the market had been expecting 1.4%. Annual growth was 4.7%, down from the expected 5.2%.

Further damaging the Australian currency was a 8.1% fall in consumer confidence reported in the latest survey.

The New Zealand dollar was lower at $0.4215.

The Polish zloty was again softer at 4.50/dollar, as dollar inflows were expected to decline in the coming weeks.

The Indonesian rupiah dropped sharply again today following a bomb blast at the Jakarta stock exchange. At present, the rupiah was at 8,790/dollar, having lost around 5% in the last few days.

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