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Euro hits multi-month highs after German court backs ESM

ForexSep 12, 2012 06:30AM ET
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Investing.com - The euro rose to multi-month highs against the other major currencies on Wednesday, after Germany’s constitutional court approved the ratification of the euro zone’s new bailout fund, while speculation over further easing by the Federal Reserve continued to weigh on the dollar.

During European late morning trade, the euro was trading close to a four-month high against the U.S. dollar, with EUR/USD up 0.53% to 1.2922.

The ruling by Germany’s constitutional court will allow the country’s president to ratify the European Stability Mechanism under certain conditions and clear the way for the European Central Bank’s bond purchasing program to proceed.

The court said Germany’s liability to the EMS must not exceed EUR190 billion without the approval of the lower house of parliament and said that both houses of parliament must be kept informed about decisions relating to the ESM.

Following the ruling, Eurogroup head Jean-Claude Juncker said the ESM would come into effect by January first 2013 at the earliest.

The greenback remained under broad selling pressure amid speculation that the U.S. central bank may implement a third round of quantitative easing after its upcoming policy meeting, which concludes on Thursday.

The single currency was close to a two-month high against the pound, with EUR/GBP rising 0.26% to 0.8020.

The pound remained supported after official data showed that the number of people claiming unemployment benefit in the U.K. fell by a seasonally adjusted 15,000 in August, defying expectations for an increase of 500.

The unemployment rate ticked up to 8.1%, from 8.0% in July, compared to forecasts for an unchanged reading.

The euro pushed higher against the yen and the Swiss franc, with EUR/JPY up 0.56% to 100.52 and EUR/CHF rising 0.14% to 1.2084.

The shared currency was broadly lower against the Australian, New Zealand and Canadian dollars, with EUR/AUD dipping 0.08% to 1.2312, EUR/NZD inching up 0.02% to 1.5731 and EUR/CAD rising 0.53% to trade at 1.2578.

Elsewhere, Italy saw borrowing drop sharply at an auction of three- and 12-month government bonds earlier, reflecting growing optimism policymakers in the euro zone will do more to stem the region’s ongoing debt crisis.



Euro hits multi-month highs after German court backs ESM
 

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