MW: Euro gains on Europe optimism but dollar retreats
By Sue Chang and Polya Lesova, MarketWatch
SAN FRANCISCO (MarketWatch) — The euro advanced on Monday amid increasing speculation that policy makers will be able to get a grip on Europe's debt crisis but the dollar fell as risk appetite revived.
In midday North American trading, the euro EURUSD +0.08% was quoted at $1.3342 against the greenback, up from $1.3224 in late trading on Friday.
News reports over the weekend suggested a range of fresh developments could be in the cards for Europe, bolstering the euro.
Various reports said that European officials have agreed on how to leverage a key rescue fund, and that French and German officials were discussing deeper integration measures aimed at strengthening fiscal discipline by euro-zone governments. Read more on European reports.
“The sovereign debt crisis [in Europe] has no outlet under the current framework. Change is needed and the signs are that this is starting to bite,” Andrew Wilkinson, chief economic strategist at Miller Tabak & Co., said in his investor note.
Still, the euro’s rally is expected to be short lived as the fundamental outlook for Europe deteriorates, according to David Song, a currency analyst at the DailyFX.
Meanwhile, the International Monetary Fund denied a report in Italy’s La Stampa that the IMF would offer up to €600 billion ($801 billion) in aid to Italy.
“There are no discussions with the Italian authorities on a program for IMF financing,“ an IMF spokesperson said in a statement.
The dollar index DXY -0.66% , which measures the performance of the greenback against a basket of six major currencies, dropped to 79.075 from 79.688 in late North American trading on Friday.
The dollar lost ground as risk appetite revived and global stock markets rebounded. Read MarketWatch’s stock market report
The British pound GBPUSD +0.35% rose to $1.5538 from $1.5470.
Against the Japanese yen USDJPY +0.47% , the dollar bought ¥78.08, up from ¥77.405 on Friday.
A senior finance ministry official in Tokyo said Japan could conduct further solo intervention in the foreign-exchange market and suggested that the yen is overvalued.
Vice Finance Minister Takehiko Nakao also reportedly said there was “no reason that Japan should be regarded as a safe haven.” See report on Japanese comments on forex intervention.
Sue Chang is a MarketWatch reporter in San Francisco.
Sarah Turner contributed to this report.
