Polish zloty rallied as premier’s party prevails in elections
By Deborah Levine and William L. Watts, MarketWatch
NEW YORK (MarketWatch) — The euro rose the most since January against the U.S. dollar Monday after France and Germany vowed to act to safeguard European banks, relieving worries about the continent’s willingness to take additional steps to prevent the sovereign debt crisis from spreading and slowing growth.
The euro EURUSD +2.02% rose to $1.3656, up from $1.3401 in late North American trading Friday. It rose as high as $1.3641, the biggest jump on a closing basis since mid-January.
The dollar index DXY -1.61% , which tracks the performance the greenback against a trade-weighted basket of six major currencies, fell to 77.513 from 78.660 late Friday. U.S. bond markets and federal offices were closed for Columbus Day.
The euro’s gains came as German Chancellor Angela Merkel and French President Nicolas Sarkozy said Sunday they’ve reached an agreement to recapitalize beleaguered European banks, though details of the plan won’t be available until later this month. See report on French, German deal to support European banks.
By Deborah Levine and William L. Watts, MarketWatch
NEW YORK (MarketWatch) — The euro rose the most since January against the U.S. dollar Monday after France and Germany vowed to act to safeguard European banks, relieving worries about the continent’s willingness to take additional steps to prevent the sovereign debt crisis from spreading and slowing growth.
The euro EURUSD +2.02% rose to $1.3656, up from $1.3401 in late North American trading Friday. It rose as high as $1.3641, the biggest jump on a closing basis since mid-January.
The dollar index DXY -1.61% , which tracks the performance the greenback against a trade-weighted basket of six major currencies, fell to 77.513 from 78.660 late Friday. U.S. bond markets and federal offices were closed for Columbus Day.
The euro’s gains came as German Chancellor Angela Merkel and French President Nicolas Sarkozy said Sunday they’ve reached an agreement to recapitalize beleaguered European banks, though details of the plan won’t be available until later this month. See report on French, German deal to support European banks.
“The renewed pledge to tackle the European debt crisis propped up market sentiment,” said David Song, currency analyst at DailyFX.
A rescue plan for troubled European lender Dexia SA BE:DEXB -4.73% also helped to soothe nerves, allowing the euro to gain ground, said Jane Foley, senior currency strategist at Rabobank International in London.
Still, a lack of details on bank recapitalization plans and ongoing fears about the region’s banking sector could set the stage for further euro weakness, she said.
“Of far greater concerns for the markets is whether Dexia will prove to be only the first banking causality of the euro-zone crisis and whether the reassurances of the political leaders to stand behind their banks will be enough to see the sector through the next few months,” she said.
Also aiding the shared currency was a Reuters report that a review team from Greece’s troika of international lenders — the European Union, International Monetary Fund and European Central Bank — were set to conclude talks with Greek officials and release a statement later Monday or Tuesday.
That would likely clear the way for the release of Greece’s next tranche of aid, which is needed by mid-November to avert default.
The European currency took a wild ride on Friday, rising above $1.35 after a better-than-expected U.S. employment report eased global-growth concerns but then falling below $1.34 after Fitch Ratings downgraded the sovereign debt of Italy and Spain.
Japanese yen, Polish zloty
Among other major currency pairs, the dollar slipped against the Japanese yen USDJPY -0.17% to ¥76.74 from ¥76.90 at the end of last week. Japanese financial markets were closed for Sports Day.
The British pound GBPUSD +0.71% added to its Friday gains, changing hands at $1.5674 compared to $1.5563 late Friday.
In emerging-market news, the Polish zloty jumped versus both the euro and the dollar after Prime Minister Donald Tusk’s ruling coalition won Sunday’s election.
With nearly all votes counted, Tusk’s centrist Civic Platform won 39.2% of the vote, with main rival Jaroslaw Kaczynski’s conservative Law and Justice party winning 29.9%, the Associated Press reported. Tusk’s preferred coalition partner, the Polish People’s Party, won 8.4%, AP reported.
“Overall, the outcome of the elections is good news for investors as pro-market policies are likely to be continued and there should be a solid parliamentarian majority for fiscal reforms,” said Lars Christensen, chief analyst at Danske Bank in Copenhagen.
The euro EURPLN -1.83% fetched 4.3296 zloty in recent trade, a fall of 0.8%. The dollar USDPLN -3.78% declined 3.2% to 3.1633 zloty.
