Euro broadly lower as Fed rally pauses, Spain concerns weigh

Published 09/17/2012, 06:09 AM
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Investing.com - The euro was broadly lower against the other major currencies on Monday, as the global rally that followed the Federal Reserve's announcement of fresh easing measures paused, while renewed concerns over Spain's financial woes weighed on market sentiment.

During European late morning trade, the euro edged lower against the U.S. dollar, but remained close to a four-month high with EUR/USD falling 0.16% to 1.3107.

The euro fell to a two-day low against the greenback after the European Central Bank said that its current account fell to EUR9.7 billion in July, from EUR14.3 billion the previous month. Analysts had expected the bank's current account to decline to EUR10 billion in July.

The single currency also weakened after ECB policymaker Ewald Nowotny earlier reminded Spain that it needs to apply for a rescue package to qualify for the central bank’s bond-buying program.

Reuters reported that Spanish Prime Minister Mariano Rajoy is looking to delay any request for aid, preferring an alternative strategy if possible, and that the government is preparing to unveil a further economic reform package late September.

Meanwhile, the greenback remained under pressure after the Fed announced last week that it would buy USD40 billion of mortgage-backed securities every month and would keep buying them until the job market improves.

The bank also said it expects to keep short-term interest rates at record low levels through at least mid-2015, six months longer than previously anticipated.

The single currency was close to a three-month high against the pound, with EUR/GBP shedding 0.19% to 0.8081.

Earlier in the day, industry data showed that house prices in the U.K. fell by 0.6% in September, following a 2.4% drop the previous month.

The euro was lower against the yen, with EUR/JPY slipping 0.15% to 102.79, and steady against the Swiss franc, with EUR/CHF easing up 0.01% to 1.2169.

The shared currency was mixed against the Australian, New Zealand and Canadian dollars, with EUR/AUD adding 0.11% to 1.2460, EUR/NZD dipping 0.08% to 1.5822 and EUR/CAD edging 0.10% lower to trade at 1.2751.

In New Zealand, the Westpac Banking Corporation said earlier that its index of consumer sentiment rose to 102.5 in the thrid quarter, from a reading of 99.9 in the previous quarter.


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