WSJ:WORLD FOREX: Euro Firm As SNB Reiterates Floor Commitment
--Euro firms after the SNB restates floor commitment
--Dollar weakness extends ahead of a slew of U.S. data
--Sterling, emerging European currencies bounce
By Eva Szalay
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--The euro broadly recovered Thursday, in line with firmer equities and after the Swiss National Bank reiterated its commitment to defend its Swiss franc ceiling.
The franc slipped against the euro, pushing the single currency to the day's high of CHF1.2094, after the SNB repeated that it is ready to buy "unlimited" amounts of currency to keep a CHF1.20 floor under the euro's value.
The SNB also hinted at additional measures if the Swiss economy deteriorates, a theme picked up by some market participants.
"We believe it is likely that the SNB sets a higher floor [for the euro's exchange rate against the franc] in the upcoming months," analysts at Morgan Stanley wrote in a note to clients.
The single currency had a poor start to the session as disappointment filtered through to currency markets that German Chancellor Angela Merkel, French President Nicolas Sarkozy and Greek Prime Minister George Papandreou had failed to come up with new measures to contain the euro-zone crisis after a telephone discussion.
Concerns related to a possible Italian credit downgrade, with Moody's Investors Service Inc. due to complete a review soon, also nagged.
"It seems that the euro-zone debt crisis is no nearer a solution than it was last week and consequently, despite today's better tone, it is fair to expect the market to remain in a very jittery mood," said Rabobank.
But as equity markets opened higher and Spain successfully auctioned EUR3.95 billion of bonds, traders turned more positive on the currency. The euro also benefited from a renewed bout of general dollar selling, with the buck slipping toward its lowest level so far this month against the yen.
"[The pair] has begun once again to ever-so-slowly creep lower under the weight of half-year end supply from the exporter community," said Citi. "But with importers and local investors bidding every few pips, it is unlikely that the sleeping beast is going to awaken just yet."
Commerzbank said the dollar could get some help from a slew of U.S. economic data later in the day, notably the Philadelphia-Fed index, which could dampen fears of further quantitative easing if it comes in on the strong side.
Sterling was also in demand after U.K. inflation expectations reached their highest levels since August 2008 and as retail sales data contained no negative surprises.
Pressure on emerging market currencies also eased, with both the Hungarian forint and the Polish zloty off their lows against the euro, while the South African rand also benefited from the mildly better investor sentiment.
U.S. August inflation and the U.S. Empire State manufacturing survey are due at 1230 GMT, with the Philadelphia Fed business outlook survey and a speech by International Monetary Fund Managing Director Christine Lagarde on the global economy at 1400 GMT.
The euro traded at $1.3812 from $1.3756 late Wednesday, according to EBS via CQG. The euro was at CHF1.2059 from CHF1.2044 and it rose to Y105.75 from Y105.39.
The dollar fell to Y76.57 from Y76.64 late Wednesday. It dropped against the Swiss franc to CHF0.8730 from CHF0.8762. The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at about 76.546 from 76.807.
-By Eva Szalay, Dow Jones Newswires; 44 20 7842 9305;
