Euro rises as China pledges to help in easing European debt crisis

By @ibtimes on

The euro rose versus the dollar and Japanese yen after the People's Bank of China said it will help in easing the European debt crisis through investing in Europe's bailout funds, easing some of the worries in markets after the cancellation of the euro area finance minister's meeting today.

The upbeat announcement along with the better-than-expected contraction in euro area's fourth quarter GDP report, which reflected 0.3% contraction from expectations of -0.4%, compared with the revised 0.1% expansion, managed to ease jitters in the markets stemming from worries that Greece may not receive a second bailout and thereby relapse into default in March as 14.5 billion euro debt matures.

Euro area finance chief's meeting which was set to be held today; however it was cancelled due to the lack of political assurances from Greek leaders to commit to spending cuts.

The awaited meeting was cancelled by Jean Claude Junker and replaced by a telephone conference as Greece so far could not outline methods to fill the 325 million euro shortfall in budget cuts for the current year as well as to sign written commitment from political party leaders to adopt austerity measures.

Yet, after the cancellation of the meeting, a government official in Athens said leaders Antonis Samaras and George Papandreou will write commitments today.

Concerning the EUR/USD pair, it currently showing advance on the daily basis to trade around 1.3160, after falling to a low of 1.3106 while the day's high was recorded at 1.3190. Meanwhile,the suggested trading range for today is among key support at 1.2925 and key resistance at 1.3375.

The U.S. dollar index, on the other hand, fell against a basket of major currencies, where the dollar index slipped to a low of 79.09 compared with the day's opening level of 79.36.

The USD/JPY continued its rally, affected by the BoJ unexpected expansion in its asset buying and lending scheme by 10 trillion yen to 65 trillion yen yesterday. Currently, the pair is trading around 78.55, where the breach of SMA 200 level at 78.00 paved the way for further incline.

The day's high was seen at 78.65 while the low was touched at 78.33; the trading range for today is among key support at 77.30 and key resistance now at 80.00.

Moving to the British pound, it is showing some advance versus the greenback, where the inflation report did not have much impact as it did not add new details.

The inflation report said growth prospects are weak over the near term while prices are expected to continue deceleration.

The GBP/USD is meanwhile trading around 1.5708 after touching a high of 1.5735 and a low of 1.5672.Thetradingrange for today is among key support at 1.5460 and key resistance at 1.5975.

Join the Discussion