The euro traded 0.1 percent from a six-week high versus the dollar before European Union finance ministers meet in Brussels today amid optimism the region can find solutions for its debt crisis.
The euro held a three-day gain against the yen after Greece offered to spend as much as 10 billion euros ($13 billion) to buy back government securities and as Spain said it expects funds for bank recapitalization next week. The dollar remained lower as U.S. lawmakers continue negotiations on how to avert the so-called fiscal cliff of spending cuts and tax increases. Demand for Australia’s currency was limited on speculation the central bank will lower interest rates today.
“Euro sentiment has brightened and there is reason to be optimistic,” said Mike Jones, a currency strategist at Bank of New Zealand in Wellington. “I still can’t help but think that the missing ingredient for sustained gains is some improvement in the economic data out of Europe.”
Jones predicts the euro will be at $1.30 by Dec. 31.
The euro fetched $1.3056 as of 8:26 a.m. in Tokyo from $1.3054 yesterday, when it touched $1.3076, the most since Oct. 23. The shared currency was little changed at 107.30 yen from yesterday, having risen 1 percent in the past three sessions. The U.S. currency slid 0.1 percent to 82.19 yen. The so-called Aussie traded at $1.0425 from $1.0421, after having fallen 0.5 percent in the past three days.
Greece invited holders of bonds to tender their securities in a so-called modified Dutch auction, the Athens-based Public Debt Management Agency said in a statement yesterday on its website. PDMA offered an average maximum purchase price for the bonds maturing from 2023 to 2042 of 34.1 percent. The offer runs to 5 p.m. London time on Dec. 7.
Euro-area finance ministers voiced confidence that Greece will pull off a successful bond buyback as they met in Brussels yesterday. “I’m confident it will go well,” French Finance Minister Pierre Moscovici told reporters yesterday. “It seems to be happening under satisfactory conditions.” Finance chiefs from the European Union’s 27 nations will meet in Brussels today.
In the U.S., House Republicans, rejecting President Barack Obama’s demand for higher tax rates, countered with a $2.2 trillion deficit-cutting plan that would trim Medicare and Social Security and cap tax deductions for top earners. The proposal, in a letter yesterday to Obama from House Speaker John Boehner and other Republican leaders, seeks $800 billion in tax revenue in the next decade and would slow the growth in Social Security cost-of-living payments.
Demand for Australia’s currency was limited as swaps trades indicate a 93 percent chance the Reserve Bank will lower the overnight cash-rate target today. Nineteen out of 28 economists surveyed by Bloomberg News expect a 25 basis point cut to 3 percent today.
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