The euro inched up in Asia on Monday after leaders of Germany
and France promised a new comprehensive plan to
recapitalise euro zone banks by the end of the month, though markets remain
wary as they have been disappointed many times before.
The euro eked out a gain of
around a quarter of a cent to $1.3390, from $1.3375 on Friday when it had come
under pressure following ratings downgrades of Italy and Spain.
Hourly resistance is found at
$1.3423 and a break above should ease the downward pressure, according to a
trader. Against the yen, the euro eased to 102.84 yen, off a one-week peak of
103.85 on Friday.
The meeting between German
Chancellor Angela Merkel and French President Nicolas Sarkozy offered no
details, but drew a pledge to do what is necessary to shore up banks, settle
the Greek crisis and help growth in Europe, giving a gentle boost to risk
sentiment.
Markets, however, are cautious
as EU leaders have promised to resolve the debt crisis before and that could
keep the common currency within Friday's range of $1.3360-$1.3525. Trading is
expected to be thin withJapan off while the U.S. celebrates Columbus
Day.
France, Belgium and Luxembourg
agreed a rescue plan for Dexia, while other French banks have come under
intense pressure because of their exposure to Greece and other weak European countries. BNP
Paribas and Societe Generale denied they would seek to raise a combined 11
billion euros as part of a broader European recapitalisation plan.
Adding to pain, the next aid
tranche for Greece is far from being a done deal with the IMF indicating the nation is
at a crossroads and will need to implement "much stricter structural
reforms" than seen so far.
Athens could run out of cash
as soon as mid-November without the new 8 billion euro aid installment,
increasing the risk of a default that would drag the region deeper into a debt
crisis already shaking financial markets worldwide.
The dollar index was steady at
78.718, having fallen to a 9-day trough of 78.061 on Friday, despite
better-than-expected U.S. payrolls. The dollar, at 76.71 against the yen,
remained stuck in the 77.29-76.09 range of the past month.
This week's focus will be on
key China data with trade and CPI due Thursday
and Friday. Strong trade numbers and a lower CPI would be the best combination
to ease concerns of a hard landing and boost risk sentiment.
(Editing by Wayne Cole)
Source : Reuters
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