By: Barbara Zigah

Investor’ short covering helped to push the Euro higher earlier in the in Asian trading following an initial and uncredited report in an Italian newspaper which said that the International Monetary Fund was arranging an assistance package for Italy. According to the article, the IMF would provide Italy with an 18-month, 4-5% loan of some €600 billion. However, upon further consideration of the report, investors’ skepticism has given way on the realization that the report could be erroneous, given that the amount as reported is well beyond the current capacity of the IMF. While sources confirm that the IMF and the Italian government have been in close contact recently, there has been no confirmation from either party that any deal has been struck.

One forex strategist in Singapore voiced investors’ concerns, saying that he believes such a move by the IMF would be imprudent and would mean that the IMF would sacrifice – for a single country – all of its current resources, and ask for additional funds from its membership for the shortfall.

As reported at 11:23 a.m. (JST) in Tokyo, the Euro was trading at an intra-session high of $1.335, with resistance pegged at the 5-day moving average of $1.3354. Currently, as at 2:30 p.m. (JST), the Euro is trading at $1.3292.