BLBG:Euro Rises as Court Says ESM Ruling Will Not be Delayed
The euro advanced against the dollar after Germany’s top constitutional court said it won’t delay a ruling on the country’s role in the currency bloc’s permanent bailout fund.
The U.S. currency declined against all but one of its 16 major peers before the Federal Reserve starts a two-day meeting tomorrow amid speculation it will buy bonds to boost the economy in a third round of quantitative easing. The Federal Constitutional Court is due to decide tomorrow on Germany’s participation in the European Stability Mechanism, a 500 billion-euro ($638 billion) fund that offers loans to member states and may buy their bonds to lower borrowing costs.
“The market is anticipating the German Constitutional Court will approve the ESM,” said Yoshitsugu Fujita, assistant vice-president of global markets in New York at Sumitomo Mitsui Trust Bank Ltd. “If it actually passes” the euro will be bought, he said.
The 17-nation shared currency gained 0.4 percent to $1.2807 at 8:09 a.m. London time. It advanced 0.3 percent to 100.16 yen. The greenback slipped 0.1 percent versus the Japanese currency to 78.21 yen.
A plaintiff in the ESM case had asked for a delay after the European Central Bank pledged unlimited funds to buy government bonds. The bid won’t change the ruling date, the court said in an e-mailed statement today.
To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
