EU Morning Report - Euro records new highs

The euro produced gains against most of its major counterparts, as a better than expected German Ifo Business Climate index, improved market sentiment. European Central Bank President Draghi said that he does not see any signs of inflationary pressure at the moment but 'quite the opposite'. The Greek parliament approved the debt swap law on Thursday, which contains legislation for collective retroactive action clauses. Finance Minister Venizelos stated his belief that "Greece will be a different country after this transaction”. Against the US dollar, the single currency advanced to 1.3373 from 1.3254, recording a 10-week high at 1.3378. Versus the British pound, the euro jumped to 0.8495 from 0.8458, producing a fresh 2-month high at 0.8499. Against the Australian dollar, the single currency continued its rebound reaching as high as 1.2496, a 6-week high.

The US dollar was softer versus a basket of currencies on the back of slightly better than expected Unemployment Claims for past week. These data put on hold the greenback appreciation against the Japanese yen, dropping to 79.93 from 80.27. Versus the Swiss franc, the US dollar dropped to 0.9010 from 0.9102, producing a 3-month low.

The British pound rose to 1.5743 from 1.5669 versus the US dollar. Bank of England, Monetary Policy Committee member David Miles - who voted in vote in favor of GBP 75 billion of quantitative easing against GBP 50 billion - said the economic environment remains unstable and policy needs to be expansive. The Australian dollar rebounded from multi-week lows to 1.0726. This came after Reserve Bank of Australia Governor Stevens said that monetary policy is 'about right for the moment' and did not suggest a rate cut.