(RTTNews) - The European currency showed mixed trading against its major rivals in early deals Tuesday as traders stay on the sidelines ahead of Wednesday's European summit. While the euro edged higher against the US dollar and the Japanese yen, it was unable to make any significant headway against the pound and the Swiss franc.
European stocks are also trading mixed as caution prevailed ahead of the crucial European leaders meeting. Policymakers are in disagreement over the size of losses private holders of Greek debt will take, reports released today suggested, raising uncertainty about the outcome of Wednesday's summit.
The Euro Stoxx 50 index of euro zone blue chippers is down 0.2 percent, while the Stoxx Europe 50 is little changed. Around Europe, France's CAC 40 is declining 0.3 percent and Switzerland's SMI is losing half a percent, but the German DAX is gaining 0.9 percent and the U.K.'s FTSE 100 is up 0.2 percent.
At Wednesday's summit, leaders are expected to seek an agreement on recapitalizing European banks, leveraging the European Financial Stability Facility bailout fund and providing debt relief to Greece to prevent the region's debt crisis from spreading to Italy and Spain.
Policymakers are in disagreement over the size of losses private holders of Greek debt will take, raising uncertainty about the outcome of the summit meeting. Adding to concerns, Italy's cabinet has failed to agree on new economic reform proposals as the country seeks to relaunch its economy and tackle its debt.
Much uncertainties prevail amid media reports, which showed the German parliament will hold a full vote tomorrow on the proposals to leverage the European Financial Stability Fund. Merkel is unable to agree to change the EFSF without passing the vote.
The common currency climbed to 1.3961 against the US dollar around 6:35 am ET, its highest level since September 9, mainly due to across the board weakening of the latter. If the euro strengthens further, it may find target around the 1.4090 where the falling 100-day simple moving average level of the pair lies.
The euro rose as high as 106.35 against the yen before holding steady around 6:35 am ET. The euro was unable to break yesterday's 5-day high of 106.48 but managed to hold above the 106.0 level mostly in the session. The pair is presently quoted at 106.13.
Japanese Finance Minister Jun Azumi reiterated that the government is ready to take decisive measures if the yen rise is excessive. He said that the recent surge in yen was speculative and does not reflect economic fundamentals. The yen climbed to a fresh record high of 75.81 against the US dollar on Friday, beating its earlier record high of 75.97 on August 19.
(RTTNews) - Azumi also urged European leaders to evolve an comprehensive solution to their debt troubles at the Wednesday summit, as the debt crisis is also contributing to the yen's surge. The Finance Ministry intervened in the foreign exchange market on August 4 for the first time since March to stem the gains in the currency.
The single currency that tested yesterday's high of 0.8727 against the pound in early Tuesday European deals erased gains around 5:30 am ET and moved broadly sideways thereafter. The euro-pound pair thus fell a few pips short of the 50-day simple moving average level and if the pair strengthens further, it could test resistance at its 100-day falling SMA of 0.8783.
U.K. mortgage approvals declined unexpectedly in September, the British Bankers' Association said today. The number of mortgage approvals totaled 33,130, down from 35,069 in August and below the expected figure of 36,000. Overall mortgage approvals, including house purchase and re-mortgage, fell to 72,641 from 77,582 in the prior month.
The euro that tested yesterday's low of 1.2233 against the Swiss franc in the early Asian session lacked a clear direction in subsequent trading hours. The euro-franc pair see-sawed between a high of 1.2285 and a low of 1.2235 and the pair was worth 1.2260 at the time of writing.
