(RTTNews) - During early European deals on Wednesday, the euro edged up against other major currencies as concerns over the eurozone debt crisis eased after reports that France and Germany have reached a deal to enlarge the bailout fund.
Britain's Guardian newspaper reported on Tuesday citing senior European Union diplomats that France and Germany had agreed to boost a euro zone financial rescue fund to two trillion euros.
The plan consists of two parts: leveraging the EFSF fivefold and bank recapitalization, and some of technical details of those will be agreed by finance ministers in the run-up to the G20 summit in Cannes, according to the Guardian report.
However, Moody's Investors Service late Tuesday downgraded Spain's sovereign ratings by two notches to 'A1' from 'AA2', citing high external indebtedness of the Spanish banking and corporate sectors.
Moody's becomes the third ratings service to downgrade Spain's rating in less than a week, following similar actions by Standard and Poor's and Fitch Ratings last week.
But currencies reacted little to Spain's downgrade as market attention was on the EU summit this weekend, where the leaders are expected to find a solution to the debt crisis.
The euro that closed yesterday's trading at 0.8755 against the pound is now trading at a 2-day high of 0.8790. The next upside target level for the euro-pound pair is seen at 0.880.
Policy makers of the Bank of England unanimously decided to expand quantitative easing by GBP 75 billion to GBP 275 billion in October, minutes of the meeting released by the Bank of England showed.
The nine-member Monetary Policy Committee (MPC) led by Governor Mervyn King also voted unanimously to maintain the interest rate at a record low 0.50 percent at the meeting held on October 5 and 6.
"For some members, the substantial downside risks pointed to injecting a larger monetary stimulus than otherwise in order to place the UK economy in a stronger position were those risks to materialise," the minutes revealed.
Against the Swiss franc, the euro is trading near a 5-month high of 1.2469, compared to yesterday's close of 1.2361. On the upside, 1.300 is seen as the next target level for the European currency.
The euro is presently trading at 2-day highs of 106.30 against the yen and 1.3841 against the compared to yesterday's close of 1.3759 and 105.72, respectively. If the euro climbs further. It may likely target 107.0 against the yen and 1.390 against the dollar.
Investors now focus on the North American session, in which the U.S. CPI, housing starts and building permits - all for September are slated for release at 8:30 am ET.
(RTTNews) - The Federal Reserve is due to release its Beige Book at 2 pm ET.
