By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — The euro was steady versus the dollar and higher versus the yen after notching its highest level against the flagging Japanese currency since early June on growing expectations European leaders will take action to save the shared-currency project.
The ICE dollar index DXY +0.07% , a measure of the U.S. unit against a basket of six major rivals, traded at 82.452, up from 82.392 in North American trade late Thursday.
The euro EURUSD -0.12% changed hands at $1.2355, little changed from $1.2356. Against the yen, the euro EURJPY -0.02% traded at ÂĄ98.09, up from ÂĄ97.66. The euro rose as high as ÂĄ98.41, its highest level since June 7.
Remarks by German Chancellor Angela Merkel, speaking in Canada, were credited with boosting the euro on Thursday. The chancellor said Germany is committed to maintaining the euro and appeared to back European Central Bank President Mario Draghi’s proposal for the ECB to resume buying government bonds in the secondary market for countries that agree to tap the euro-zone rescue fund and accept strict conditions on fiscal policy. Read: Merkel says Germany committed to euro.
“Although the euro has been fairly resilient this week and the peripheral bond market has recovered well…, we are still missing a major piece of the jigsaw puzzle—the ECB has not yet clarified its position and is not yet acting as the lender of last resort,” said Kathleen Brooks, research director at Forex.com in London.
Spain appears reluctant to give up its budget sovereignty and is unlikely to tap the rescue funds as long as bond yields are falling, which in turn makes it less likely the ECB will step in, she said.
“The FX market may be buying euro, but not in huge quantities hence the bulls don’t seem to have the puff to get EURUSD above $1.2450 anytime soon now that it is increasingly unlikely that the Federal Reserve will embark on more [quantitative easing] at its September meeting,” Brooks said, in a note.
The dollar fetched 79.40 Japanese yen USDJPY +0.09% , up from ÂĄ79.37 late Thursday.
The British pound GBPUSD -0.17% bought $1.5694, down from $1.5732. The Australian dollar AUDUSD -0.79% fell to $1.0434 versus its U.S. counterpart, down from $1.0497.
William L. Watts is MarketWatch's European bureau chief, based in Frankfurt.
