Reuters: US Dollar Report: FOREX-Euro jumps most in 8 mths on EU deal on bank supervision

Reuters: US Dollar Report Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

FOREX-Euro jumps most in 8 mths on EU deal on bank supervision Jun 29th 2012, 03:48 Thu Jun 28, 2012 11:48pm EDT * ECB to act as agent for rescue funds in operations-Van Rompuy * Agreement upends expectations for no progress at EU summit * Investors want to see if all EU leaders in agreement * Agreement may be enough to end market risk aversion -economist * China PMI on Sunday next in focus By Antoni Slodkowski TOKYO, June 29 (Reuters) - The euro surged 1.2 percent, poised to make its biggest daily jump in 8 months after European leaders agreed on Friday to create a single supervisory body for euro zone banks and allow them to be recapitalised directly by the currency area's rescue fund without adding to government debt. European Council chairman Herman Van Rompuy said the aim was to create a supervisory mechanism involving the European Central Bank by the end of this year, and to break the "vicious circle" between banks and sovereign governments. "If what he said was indeed agreed by EU leaders, that would clearly go beyond market expectations and should be enough to stop risk aversion in financial markets," said Hiroki Shimazu, senior market economist at SMBC Nikko Securities. "But I'm a bit still cautious as we have seen the cases where different leaders later say different things and we find out that there remain disagreements," he said. The common currency soared 1.2 percent to $1.2588, pulling away from a low of 1.2407 marked on Thursday. Van Rompuy also said countries that were complying with European Union budget policies would be able to access the bloc's temporary EFSF and permanent ESM rescue funds to support their government bonds on financial markets. Spain and Italy had withheld their agreement to a growth package at a European Union summit to demand emergency action to bring down their spiralling borrowing costs, which threatened to force the third and fourth largest economies in the euro zone out of the capital markets. "Expectations ahead of the summit were extremely low after the EU leaders have disappointed so many times in the past, but now we're seeing they've come out with concrete solutions," said Teppei Ino, currency analyst at the Bank of Tokyo-Mitsubishi UFJ. Against the yen, the euro jumped 1.2 percent to 99.97 yen, pulling away from a low of 98.37 plumbed on Thursday. But the yen was supported against the dollar by Japanese exporters who offloaded the U.S. currency in vast quantities in end-of-quarter transactions, traders said. As a result, the greenback slipped to a 1-1/2 week low against the yen to 79.20. High-beta currencies like the Australian dollar, which enjoyed a surprise short-covering rally on Thursday, extended the previous session's gains on the euro zone news. The Aussie jumped 1 percent to $1.0131. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions