Reuters: US Dollar Report: FOREX-Euro hits 2-week highs as ECB says ready to buy bonds

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 hits 2-week highs as ECB says ready to buy bonds Oct 4th 2012, 16:21 Thu Oct 4, 2012 12:21pm EDT * Draghi affirms support for the euro * ECB leaves rate unchanged at 0.75 percent, Spain in focus * Markets wary of BoJ decision By Gertrude Chavez-Dreyfuss NEW YORK, Oct 4 (Reuters) - The euro hit two-week highs against the U.S. dollar and yen on Thursday after the European Central Bank's chief said the ECB was ready to implement a bond-buying program that would lower borrowing costs for debt-stricken countries. Investors were anticipating details about the ECB's bond buying scheme, a key ingredient of the bank's overall strategy to counter the euro zone's debt crisis. While ECB President Mario Draghi did not provide specifics about the scheme in his news conference, his assurances that the ECB has a "fully effective backstop mechanism in place" to implement the plan cheered investors. Draghi said the ECB's decision to undertake bond purchases has eased tensions in the region. "The markets are rallying ... on the idea that the ECB is standing ready to act if necessary," said Neal Gilbert, currency strategist at GFT in New Jersey. Draghi also affirmed his commitment to preserve the region's monetary system and currency. He said the " euro is irreversible", adding that he remains firmly committed to keeping the "singleness" of monetary policy in the euro zone. This was not the first time that Draghi came out in defense of the euro. In July, he vowed to do whatever it takes to keep the euro zone common currency in place, fuelling a euro recovery that lifted it from two-year lows. Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington said his commitment to preserve the euro further eased break-up concerns. Players overall expected few surprises from Draghi's news conference after the central bank held its benchmark interest rate at 0.75 percent. In midday New York trading, the euro was up 0.8 percent at $1.3002. It hit a high of $1.3012, its strongest level since Sept. 21. Against the yen, the euro climbed 0.7 percent to 102.01 yen, after hitting a two-week peak of 102.13 yen. Anticipation that Spain will ask for a bailout and trigger the ECB's bond-buying plan has made investors wary of selling the euro although uncertainty about when such a request could come has limited the currency's gains. Analysts believed, however, Spain's budget proposal seemed designed with a bailout request in mind. Also in focus on Thursday was a debt auction at which Spain raised 4 billion euros ($5.2 billion) selling tranches of bonds maturing in 2014, 2015 and 2017. Yields fell from the previous auction. The euro rose to a two-week high against the Swiss franc at 1.2136 and a two-week peak against the pound at 80.51 pence. In midday trading, the euro was flat against these currencies. The pound rose 0.5 percent against the dollar to $1.6160 after the Bank of England kept rates and its quantitative easing total on hold as expected. BOJ AHEAD The yen was broadly sluggish, dropping to a two-week low versus the dollar and euro, with investors wary the Bank of Japan may surprise on Friday by easing policy. The dollar was last flat at 78.46 yen. The BoJ, which only last month boosted its asset-buying program, has been under intense political pressure to offer more stimulus to spur growth and weaken the yen. The BoJ was expected to stand pat at its Oct. 4-5 meeting to gauge the effects of its latest easing. Pressure to ease further was expected to continue ahead of its Oct. 30 policy meeting. 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