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| Quality and accountability vital for banking supervision (Photo credit: European Parliament) |
Having drifted down through much of the week from the four-month high of $1.3172 struck Monday, the European single currency rose back above $1.30, helped by a combination of Asian and Middle East-based buying, traders said.
The dollar also lost ground against the Australian dollar and pound, in keeping with the improved mood, with sterling trading above $1.63 for the first time since April. Market participants are hoping Spain will officially request a bailout package soon, in a move that would kick start European Central Bank President Mario Draghi’s bond-buying plan and cap Spain’s borrowing costs at a sustainable level.
“So long as nothing comes along to derail [deal hopes] before the reported announcement date it should be sufficient to keep a bid under risk assets,” said Adam Cole, a currency strategist at Royal Bank of Canada Capital Markets in a note to clients, citing press reports which suggested an announcement might be made next Thursday. Yields on benchmark Spanish 10-year bonds nudged lower to 5.72% while those on other fiscally challenged euro-zone countries were steady. However, renewed concerns about the European Stability Mechanism, the euro-zone’s new bailout fund, took a little shine off the euro’s bounce. Due to Finnish concerns, the ESM is now set to launch without two leveraged vehicles that were designed to allow the euro zone to mobilize far more than the EUR500 billion ($649 billion) lending capacity ceiling. ... Continue to read.
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