Reuters: US Dollar Report: FOREX-ECB bond plan cheers euro, Aussie dollar

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FOREX-ECB bond plan cheers euro, Aussie dollar Sep 6th 2012, 22:56 Thu Sep 6, 2012 6:56pm EDT * ECB bond-buying plan gives risk appetite a fillip * Euro up, commodity currencies fare even better * Yen big underperformer on brighter sentiment * U.S. jobs data up next, then Chinese data on Sunday By Ian Chua SYDNEY, Sept 7 (Reuters) - The euro and commodity currencies like the Australian dollar held onto gains in Asia on Friday, while the safe-haven yen nursed heavy losses as markets cheered the European Central Bank's plan to tackle the region's debt crisis. ECB President Mario Draghi, backing up his promise to do whatever it takes to defend the euro, announced a new and potentially unlimited bond-buying programme aimed at lowering painfully high borrowing costs for stressed member states. The news gave investors confidence that the ECB has finally taken a big step towards stemming the region's debt woes. Euro zone blue-chip stocks surged more than 3 percent to six-month highs, while U.S. stocks hit multi-year highs. The euro rose as far as $1.2652, a level not seen since July 2, from a session trough around $1.2561. It also rallied against the Japanese currency, reaching a two-month peak at 99.80 yen. "The ECB's actions afford time, allowing risk appetite to stage a comeback for now," said Vincent Chaigneau, a strategist at Societe Generale. "Mr Draghi has won a battle, but cannot win the euro area crisis war by himself. The hardest task of all - getting governments to drop posturing in return for leadership and deep reforms - still awaits us." The bounce in the euro saw the dollar index fall back towards a 3-1/2 month trough of 80.964 plumbed last week. But the greenback jumped against the yen, thanks in part higher U.S. Treasury yields. It hit two-week highs of 79.04 yen. Stronger-than-expected data on the U.S. services sector and labour market, helped drive U.S. yields higher. All eyes are now on the influential jobs report due at 1230 GMT. Any upside surprise could temper expectations for more stimulus from the Federal Reserve. Among the best performers overnight, the Australian dollar jumped nearly 1 percent to $1.0300, posting its biggest one-day gain in a month, as markets cut bearish positions in the commodity currency. Thursday's rally saw the Aussie pull well away from an eight-week trough of $1.0167 plumbed on Wednesday. Hit by worries about a slowdown in China, Australia's single biggest export market, and amid mounting speculation of a rate cut at home, the Aussie had fallen some 4 percent since reaching a high of $1.0615 back in August. Traders expect the Aussie to consolidate in the short term, with U.S. payrolls data and a flood of Chinese data on Sunday providing a challenging backdrop for Aussie dollar bulls. Link this Share this Digg this Email Reprints

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