Forexpros - The euro was trading close to a one-month high against the U.S. dollar on Wednesday, after Spain avoided a downgrade to junk status by Moody’s, while robust U.S. housing data also supported demand for higher yielding, riskier assets.
EUR/USD hit 1.3137 during U.S. morning trade, the pair’s highest since September 17; the pair subsequently consolidated at 1.3119, gaining 0.51%.
The pair was likely to find support at 1.3052, the session low and near-term resistance at 1.3171, the high of September 17.
Moody’s confirmed Spain’s credit rating at Baaa3 with a negative outlook late Tuesday and expressed confidence that reforms enacted by the Spanish government and the European Central Bank’s bond buying program would ensure that Madrid had continued access to credit markets.
A spokesperson for Spain’s prime minister said Wednesday that Spain’s stance on a bailout had not changed and the government had not yet made a decision on requesting aid.
Sentiment on the euro has been underpinned in recent weeks by hopes that Spain will soon request a bailout from its euro zone partners, but uncertainty over the timing of a request and what form a bailout would take has persisted.
In the U.S., the Commerce Department said housing starts rose by 15% last month to a seasonally adjusted annual rate of 872,000 units, the fastest rate since July 2008 and easily outstripping expectations for a 2.7% increase.
Housing starts for August were revised up to 758,000 million units from a previously reported 750,000 million units.
Building permits grew by 11.6% to a 894,000-unit pace in September, while August's permits were unrevised at 801,000 units.
The euro was higher against the pound and the yen, with EUR/GBP up 0.15% to 0.8114 and EUR/JPY rising 0.35% to 103.33.
Also Wednesday, Germany lowered its forecast for economic growth in 2013 to 1% from 1.6% previously.
Following the announcement, Economy Minister Philipp Rosler said “Germany is navigating stormy waters because of the European sovereign debt crisis and an economic weakening in emerging nations in Asia and Latin America”.
