Forex - Euro remains on the back foot as debt crisis fears weigh

Published 11/30/2011, 05:36 AM
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Investing.com - The euro was mixed to lower against its major counterparts on Wednesday, as investors remained jittery after a meeting of euro zone finance ministers on Tuesday did little to reassure markets of progress in tackling the region’s debt crisis.

During European morning trade, the euro was weaker against the U.S. dollar, with EUR/USD slipping 0.20% to hit 1.3286.

Euro zone finance ministers agreed on a plan to expand the capacity of the bloc’s bailout fund, but said its capacity to assist indebted nations would not be as large as initially hoped.

Meanwhile, speculation over a bailout for Italy continued after senior euro zone and International Monetary Fund officials said late Tuesday that talks on a EUR400 billion rescue package may begin next month.

Earlier in the day, official data showed that the rate of consumer price inflation in the single currency bloc remained unchanged at 3% for the third straight month in November, indicating that the European Central Bank may have to hold off on rate cuts in the coming months.

A separate report showed that unemployment in the euro zone ticked up to 10.3% last month from 10.2% in September.

But the euro was slightly higher against the pound, with EUR/GBP easing up 0.09% to hit 0.8543.

A report by Gfk showed that consumer confidence in the U.K. edged up slightly this month, but remained close to a two-year low and the outlook remained downbeat.

The data came one day after Chancellor George Osborne said the U.K. economy was now expected to grow just 0.7% in 2012, down from a March budget forecast of 2.5%.

The single currency was almost unchanged against the yen but edged higher against the Swiss franc, with EUR/JPY inching up 0.03% to hit 103.77 and EUR/CHF adding 0.20% to hit 1.2285.

In Switzerland, a report showed that the KOF economic barometer slid to a new low of 0.35 this month from 0.75 in October, signaling that economic growth is losing momentum.

Elsewhere, Bank of Japan Deputy Governor Kiyohiko Nishimura said earlier that Japanese policymakers must take resolute action if currency market moves are out of line with economic fundamentals.

Elsewhere, the euro was steady against the Canadian, Australian and New Zealand dollars, with EUR/CAD slipping 0.16% to hit 1.3719, EUR/AUD easing up 0.03% to hit 1.3316 and EUR/NZD dipping 0.02% to hit 1.7488.

Earlier Wednesday, official data showed that Australia private capital expenditures rose significantly more-than-expected in the third quarter, while a separate report showed that building consents in New Zealand rebounded in October after a sharp drop the prior month.

Later in the day, the U.S. was to release a closely watched report on non-farm payrolls compiled by payroll processing firm ADP, as well as reports on manufacturing activity in the Chicago area and pending home sales.

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