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Euro steady in subdued trade ahead of ECB

Published 07/31/2012, 06:40 AM
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Investing.com - The euro gained ground against the U.S. dollar and the yen on Tuesday, but remained off recent highs amid worries over whether the European Central Bank will disappoint market expectations for fresh measures to tackle the debt crisis in the euro zone.

During European late morning trade, the euro was higher against the U.S. dollar, with EUR/USD up 0.23% to 1.2289.

Expectations have been building that the ECB will announce bold measures to tackle the long running debt crisis after central bank head Mario Draghi pledged last week to do whatever is necessary to preserve the euro.

But investors remained wary amid concerns that an inadequate policy response by the ECB could send markets lower.

Germany is opposed to granting a banking license to the bloc’s bailout fund and to the resumption of the ECB’s bond buying program.

Market participants were also anticipating the outcome of the Federal Reserve’s policy setting meeting on Wednesday, amid speculation over whether the U.S. central bank will indicate if further quantitative easing measures are imminent.

The euro also pushed higher against the yen, with EUR/JPY rising 0.32% to 96.14.

The single currency was up against the pound, with EUR/GBP climbing 0.36% to 0.7831 and remained little changed against the Swiss franc, with EUR/CHF inching up 0.01% to 1.2013.

Sentiment on the pound remained fragile after data on Monday showed that U.K. mortgage approvals fell to the lowest level in 18 months in June, while a separate report showed that net lending grew at the slowest pace in 12 months in July, underlining concerns over economic weakness.

The euro touched a fresh record low against the Australian dollar, with EUR/AUD dipping 0.01% to 1.1672, but turned higher against the New Zealand and Canadian dollars, with EUR/NZD up 0.16% to 1.5178 and EUR/CAD rising 0.16% to 1.2299.

Earlier Tuesday, official data showed that the rate of consumer price inflation in the euro zone remained unchanged at 2.4% in July.

Separate reports showed that the Germany’s unemployment rate remained steady at 6.8% in July, but Italy’s unemployment rate rose to 10.8% in June, the highest level since quarterly records began in 1999.

Later Tuesday, the U.S. was to release industry data on house price inflation, a report on consumer confidence and data on manufacturing activity in the Chicago area.


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