| CATEGORY: FX |
Mon 30 Jul 2012
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LONDON (SHARECAST) - The prospect of European leaders taking further policy action to keep the euro currency bloc together sent the euro higher on Friday.
The single currency gained momentum after German Chancellor Angela Merkel and French President Francois Hollande issued a joint statement on Friday saying they would do everything needed to preserve the euro project.
European Central Bank President Mario Draghi made similar comments that boosted sentiment about the future of the euro. He said the euro is "irreversible."
The comments also triggered hopes that European governments and the ECB would take further action increase market liquidity and introduce another long-term refinancing operation. A report from France's Le Monde newspaper said the ECB and Eurozone governments would consider buying Spanish and Italian bonds.
As fresh optimism about the Eurozone rippled through markets, demand for safe haven currencies such as the dollar faded. The dollar index, which measures the dollar's value against a basket of six trade-weighted currencies, fell to 82.636 from 82.834 the day before.
Mixed US growth data also diluted interest in the dollar. GDP was mixed with growth in the second quarter rising 1.5% at an annual rate, a touch better than the 1.4% forecast. However the figure is weaker than the upwardly revised 2% growth rate for the previous three months and growth of 4.1% in the fourth quarter of 2011.
Against the yen, the dollar rose 0.5% to ¥78.56 while sterling fell against the euro and rose against the dollar.
The pound traded at a five week high against the greenback of $1.5730, up 0.3% and the euro gained 0.4% to 78.64p on hopes of further action to stem the Eurozone debt crisis.
CJ
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