Euro On Defensive After ECB Bond Buying Report, Yen Soft
Published 2014-10-22 08:28:44| Amwal Al Ghad English
The euro flirted with one-week lows on Wednesday following a Reuters report that the European Central Bank is considering buying corporate bonds, while a recovery in risk appetite underpinned the dollar against the yen. The euro EUR= briefly fell to $1.2706 its lowest level since Thursday and last stood at $1.2723, little changed from late U.S. levels but still lethargic after 0.7 percent fall on Tuesday. Several sources told Reuters the ECB is considering buying corporate bonds on the secondary market and may make a final decision as soon as December with a view to begin buying the bonds early next year. The move, if realized, would expand the private-sector asset-buying program the ECB began on Monday, which is aimed at fostering lending to businesses in the hope of spurring growth. "It seems like quantitative easing by the ECB is within sight," said a trader at a Japanese bank.
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Get To Know
Born in 1954 in the coastal city of Balteem in the Delta governorate of Kafr El-Sheikh to a working-class family, Hamdeen Sabahi was the youngest of 11 children.He studied mass communication at Cairo University. A politically-active student, he was elected head of the Cairo University Student Union in 1975 and served as deputy chair of the General Federation of Students from 1975 to 1977. He established the political Nasserist Thought Club to mobilise on Cairo University’s campus in defence of the principles of Gamal Abdel-Nasser's 1952 revolution in a context of later rapprochement efforts with the West by then-president Anwar El-Sadat. As well as being a political activist, Sabahi worked as a journalist. In 1977, following the January popular uprising against Sadat over skyrocketing food prices, Sabahi publicly confronted the president in a televised meeting in which he spoke on behalf of the Cairo University Student Union. As a result, Sabahi was prohibited from working as a journalist in the state media sector for several years. Sabahi’s membership in the Arab Democratic Nasserist Party was suspended in 1994 due to internal conflicts between the party's young cadres – including Sabahi – and the party's old guard of personalities who had been close to late president Nasser.
The dollar hit its highest level in over six years against the yen and a 22-month high against the euro on Monday as investors bought the greenback on expectations that the monetary policy stances of the U.S. and its peers will continue to drift apart. The dollar rose to ¥109.67 from ¥109.29 late Friday in New York after touching ¥109.68 -- its highest since August 2008. The euro EURUSD, -0.01% was at $1.2676 from $1.2688 after falling as low as $1.2667 -- its lowest since November 2012. The greenback’s rise came ahead of the releases of key economic data and events later this week, including U.S. jobs data Friday, the Bank of Japan’s tankan survey of business sentiment on Wednesday and the European Central Bank’s policy meeting Thursday. But “there still remains the heat of the dollar’s strength” across the board, said Toshihiko Sakai, senior manager of forex and financial products trading division at Mitsubishi UFJ Trust and Banking, adding that it’s possible that the U.S. currency will challenge ¥110 over the short term. In its search for a cheaper manufacturing base, Japan is expanding aid and investment into Laos and other Southeast Asia’s frontier markets, many of them traditional allies of Beijing. Mr. Sakai said the dollar’s strength against the yen is largely driven by its gains against the euro, on expectations for extra steps by the ECB later this week. Investor appetites for the dollar remained strong enough to help it surpass the ¥110-threshold before the U.S. jobs data on Friday, said Nomura Securities chief FX strategist Yunosuke Ikeda in a note. The dollar will likely remain trapped around that level as hedge funds are expected to lock in profits. But if the jobs data remain robust, the dollar may go up further. And even with a weak reading, demand from long-term investors seeking to buy the dollar on dips will likely keep it steady against the yen, said Mr. Ikeda. Among other currency pairs, the British pound GBPUSD, -0.05% fell to $1.6230 from $1.6245. The euro was at EURJPY, +0.29% ¥138.69, compared with ¥138.57. The WSJ Dollar Index BUXX, +0.25% , a measure of the dollar against a basket of major currencies, was up 0.17% at 77.76.
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