By: Barbara Zigah
As hopes stay alive that the Eurozone’s policy makers are at last working toward resolution of the Eurozone debt crisis, the common currency has held onto its recent gains during trading in the Asian session. Yesterday’s announcement from the ECB that they would offer emergency loans at 12 and 13 month duration to the Eurozone banks has also helped to prop up the Euro.
As reported at 1:11 p.m. (JST) in Tokyo, the Euro was trading against the U.S. Dollar at $1.3425, a 0.1% loss from late New York levels, but well above the 9-month trough of $1.3145 struck on Tuesday. Following the ECB announcement, the Euro gained 0.6% on the greenback.
The ECB did not, however, mention a reduction in interest rates as many investors had hoped for, by implication choosing inflationary concerns over growth. Most analysts still believe that the ECB must soon act on interest rates, or risk a worsening growth crisis. Hope remains pinned, however, on the incoming ECB president,, Mario Draghi, who takes office in November.
Markets will turn their attention today to the U.S., and the key labor report which will be released by the U.S. Labor Department. The ADP jobs release earlier in the week, occasionally an indicator of the “official” data showed an increase in private sector jobs for September, and markets are hopeful that this time ADP has it right.