BLBG: Euro Erases Gains After ECB Allots More Loan to Banks Than Was Forecast
The euro fell against most of its major peers amid concern that European Central Bank measures to support its banking sector may drive down borrowing costs for governments while weakening the value of the region’s currency.
The 17-nation currency erased its advance after the ECB said it had awarded 489 billion euros ($637 billion) in 1,134- day to banks, more than the 293 billion euros forecast by economists, as investors bet the euro-region debt crisis is far from done. Asian currencies strengthened, led by South Korea’s won, as housing data in the U.S. beat economists’ estimates, brightening the export outlook.
“Long-term, there’s been no real change to the picture of the euro, it should be trending lower,” Camilla Sutton, head of currency strategy at Bank of Nova Scotia in Toronto, said in a telephone interview. “Some of the things that are near-term positives for the markets are actually very negative for the currency, particularly when it comes to further loosening of policy, regardless of how it’s done.”
The euro fell 0.4 percent to $1.3036 as of 8:25 a.m. New York time after climbing as much as 0.9 percent after the ECB announcement. Europe’s shared currency fell 0.3 percent to 101.55 yen. The dollar weakened 0.1 percent to 77.88 yen.
To contact the reporter on this story: John Detrixhe in New York at jdetrixhe1@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
