BLBG:Euro Strengthens for Second Day Amid Spanish Bailout Speculation
The euro climbed for a second day against the dollar and yen amid speculation Spain is moving closer to requesting a sovereign bailout and unlocking European Central Bank bond purchases.
The 17-nation currency advanced with Spanish bonds, rebounding from yesterday’s one-week low versus the dollar, reached in the aftermath of a Standard & Poor’s downgrade of Spain two days ago. Japan’s currency slid before data that economists said will show U.S. consumer confidence was near the strongest since May. Singapore’s dollar appreciated after its monetary authority kept policy unchanged. A report showed euro- area industrial output climbed for a second month in August.
“The euro is trading higher following the initial selloff on the Spain downgrade,” said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “It’s now being reversed given the downgrade raises the chances of a bailout.”
The euro strengthened 0.3 percent to $1.2964 at 10:10 a.m. London time after falling to $1.2826 yesterday, the weakest level since Oct. 1. It climbed 0.4 percent to 101.69 yen, after rising through its 200-day moving average for the first time in three days. The yen slipped 0.1 percent to 78.43 per dollar.
Spain’s 10-year bond yield fell seven basis points to 5.69 percent, dropping for a third day.
The Singapore dollar rose 0.5 percent to S$1.2219 versus its U.S. counterpart. It has advanced 6.1 percent this year, the best performance after the Mexican peso among the greenback’s major counterparts.
The Thomson Reuters/University of Michigan sentiment index was at 78 in October, according to the median forecast of 71 analysts in a Bloomberg News survey. That would be little changed from September’s final reading of 78.3.
Industrial output in the euro area unexpectedly increased 0.6 percent in August from July, when it also gained 0.6 percent, the European Union’s statistics office in Luxembourg said today.
To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net.
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net.
