The euro is relatively well-bid on Friday after new Troubled Asset Relief Program (TARP) developments helped to push down the safe-haven U.S. dollar and Japanese yen overnight.
On Thursday, the U.S. Senate voted 52 to 42 in favour of allowing the second half of the $700 billion TARP to pass. U.S. President-elect Barack Obama promised to spend $50 billion to $100 billion of the remaining $350 billion program in a foreclosure prevention program. Since the Senate defeated the resolution to block the program, the decision is not subjection to approval in the House of Representatives.
Subsequently, equity markets are higher (futures contracts on the Dow Jones industrial average are up 151 points to 8313) and the greenback and yen, which typically trade lower in such instances, are down across the board. The euro is up 0.0175 to a session high of 1.3291 against the U.S. dollar and up 2.72 points to a session high of 120.58 against the yen.
Meanwhile, FX strategists from Barclays Capital do not expect that rally in equities to continue for much longer.
"This is especially since investors are likely to increasingly question the effectiveness of government capital injections in supporting banks, given the experience of the past few months. As long as bad assets stay on bank balance sheets and credit markets remain clogged, it is difficult to see a sustainable recovery in bank stocks any time soon," they wrote.
Elsewhere, the euro is down 0.0016 to 1.6424 against the commodity-driven Canadian dollar, as West Texas Intermediate crude oil futures drift higher, up $0.52 per barrel to $35.92. The loonie traditionally shares a strong relationship with oil prices.
The euro is also down 0.0054 to 0.8905 against the pound sterling, but it was trending higher off its session low of 0.8845, which was reached early in the morning.
EUR/USD up 0.0175 to 1.3291.
EUR/CAD down 0.0016 to 1.6424.
EUR/GBP down 0.0054 to 0.8905
EUR/JPY up 2.72 to 120.58.
