Euro exchange rate today: EUR advances against USD as bond sell-off ceases, Finland prepares for Eurozone breakup

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Published on Friday, 17 August 2012 09:10

Written by Will Peters

International Money Transfers at our sister site

Merkel defended the ECB’s stance on bond buying, noting that the central bank’s conditionality is a “positive development for the euro”.

The euro (Currency:EUR) is performing admirably this morning after the sell-off of US Treasury securities finally came to a halt overnight halting US dollar strength.

The euro dollar exchange rate is 0.13 pct up on Thursday night's close at 1.2372.

The euro pound exchange rate is 0.23 pct higher at 0.7870.


"Crucially, the 10y yield has yet to break above 1.86% and so the yen may find a near-term foothold at these levels – at least until next week’s FOMC minutes," says Gareth Berry at UBS, commenting on the impact the bond markets continue to have on the FX space.

Turning to the European side of the equation we note Finland is preparing for the break-up of the eurozone, the country’s foreign minister has warned.

The Nordic state is battening down the hatches for a full-blown currency crisis as tensions in the eurozone mount and has said it will not tolerate further bail-out creep or fiscal union by stealth.

“We have to face openly the possibility of a euro-break up,” said Erkki Tuomioja, the country’s veteran foreign minister and a member of the Social Democratic Party, one of six that make up the country’s coalition government. “It is not something that anybody — even the True Finns [eurosceptic party] — are advocating in Finland, let alone the government. But we have to be prepared,” he told The Daily Telegraph.

Elsewhere in the Eurozone, ECB Governing Council member Nowotny noted that European policy makers should be careful not to overdo “re-regulation” of the banking sector.

He expressed scepticism on achieving a full fiscal union in the Eurozone within 3-4
years, noting that it could be completed “within a generation”.

After concluding her meeting with Canadian Prime Minister Harper, German Chancellor Merkel noted that she will push to complete the EU-Canada Free Trade Agreement quickly.

Merkel added that the EC should have stronger powers to intervene in the national budgets of the countries in the Eurozone.

Merkel defended the ECB’s stance on bond buying, noting that the central bank’s conditionality is a “positive development for the euro”.

Harper noted that he has great confidence in Europe to solve the current crisis, but declined from commenting on any specific advice he gave to Merkel