Investing.com - The euro held steady against the dollar Wednesday, up in an otherwise risk-off trading session after a Federal Reserve governor blasted the U.S. central bank's decision to jolt the U.S. economy with a third round of asset purchases from banks, arguing the policy won't lead to recovery.
In Asian trading on Wednesday, EUR/USD was trading up 0.01% at 1.2900, up from a session low of 1.2898, and off from a high of 1.2901.
The pair was likely to test support at 1.2816, the low from Sept. 12, and resistance at 1.2980, Monday's high.
Earlier, Federal Reserve Bank of Philadelphia President Charles Plosser, a noted inflation hawk, said a decision to roll out a third round of quantitative easing to encourage investing and hiring won't work in that households and businesses would rather pay down debts than take on new leverage.
Quantitative easing functions via pumping liquidity into the financial system in a way that pushes down interest rates across the economy to encourage borrowing.
"And as far as households are concerned, they continue to try to repair their balance sheets in the wake of substantial losses of housing wealth, as I indicated earlier. They are deleveraging and saving more. It seems unlikely that a small drop in interest rates will overturn the strong desire to save and, instead, induce households to spend more," Plosser said in a speech earlier, according to prepared remarks of his presentation.
"Thus, in my view, we are unlikely to see much benefit to growth or to employment from further asset purchases. If I am right, then conveying the idea that such action will have a substantive impact on labor markets and the speed of the recovery risks the Fed’s credibility," Plosser added.
"This is quite costly: If the public loses confidence in the central bank, our ability to set effective monetary policy in the future will be harmed and households and businesses will feel the consequences."
Bullish U.S. housing data sent the dollar rising against the single currency as well before the euro regained composure early in Asian trading.
The Standard & Poor’s/Case Shiller House Price Index showed that home price in 20 cities rose 1.2% in July of this year compared with the same month a year ago.
Analysts had expected the closely watched gauge on home prices to rise 1.0% in July.
Elsewhere, the Conference Board, an industry group, reported that its consumer confidence index rose to 70.3 in September from an upwardly revised 61.3 in August.
September's reading was the highest since February and outpacing analysts' calls for a 63.0 reading.
The euro did see support, however, on news that German Finance Minister Wolfgang Schauble said European policymakers should do everything in their power to protect the single currency, pointing out that defending the euro was "worth any effort."
Talk that lawyers in Germany are examining the legality of the European Central Bank's bond purchasing program offset Schauble's bullish comments for the euro.
The euro, meanwhile, was up against the pound and down against the yen, with EUR/GBP trading up 0.01% at 0.7968, and EUR/JPY trading down 0.04% at 100.31.
Later Wednesday, Germany will publish preliminary consumer price index data.
In the U.S., official data on new home sales will publish as will the government's latest data on crude oil stockpiles.
In Asian trading on Wednesday, EUR/USD was trading up 0.01% at 1.2900, up from a session low of 1.2898, and off from a high of 1.2901.
The pair was likely to test support at 1.2816, the low from Sept. 12, and resistance at 1.2980, Monday's high.
Earlier, Federal Reserve Bank of Philadelphia President Charles Plosser, a noted inflation hawk, said a decision to roll out a third round of quantitative easing to encourage investing and hiring won't work in that households and businesses would rather pay down debts than take on new leverage.
Quantitative easing functions via pumping liquidity into the financial system in a way that pushes down interest rates across the economy to encourage borrowing.
"And as far as households are concerned, they continue to try to repair their balance sheets in the wake of substantial losses of housing wealth, as I indicated earlier. They are deleveraging and saving more. It seems unlikely that a small drop in interest rates will overturn the strong desire to save and, instead, induce households to spend more," Plosser said in a speech earlier, according to prepared remarks of his presentation.
"Thus, in my view, we are unlikely to see much benefit to growth or to employment from further asset purchases. If I am right, then conveying the idea that such action will have a substantive impact on labor markets and the speed of the recovery risks the Fed’s credibility," Plosser added.
"This is quite costly: If the public loses confidence in the central bank, our ability to set effective monetary policy in the future will be harmed and households and businesses will feel the consequences."
Bullish U.S. housing data sent the dollar rising against the single currency as well before the euro regained composure early in Asian trading.
The Standard & Poor’s/Case Shiller House Price Index showed that home price in 20 cities rose 1.2% in July of this year compared with the same month a year ago.
Analysts had expected the closely watched gauge on home prices to rise 1.0% in July.
Elsewhere, the Conference Board, an industry group, reported that its consumer confidence index rose to 70.3 in September from an upwardly revised 61.3 in August.
September's reading was the highest since February and outpacing analysts' calls for a 63.0 reading.
The euro did see support, however, on news that German Finance Minister Wolfgang Schauble said European policymakers should do everything in their power to protect the single currency, pointing out that defending the euro was "worth any effort."
Talk that lawyers in Germany are examining the legality of the European Central Bank's bond purchasing program offset Schauble's bullish comments for the euro.
The euro, meanwhile, was up against the pound and down against the yen, with EUR/GBP trading up 0.01% at 0.7968, and EUR/JPY trading down 0.04% at 100.31.
Later Wednesday, Germany will publish preliminary consumer price index data.
In the U.S., official data on new home sales will publish as will the government's latest data on crude oil stockpiles.